Investment Property Expenses
When buying or selling an investment property there are many expenses that you
need to be aware of. Here is a list of some of the expenses you may encounter
when buying or selling a property.
Legal Fees / Settlement Agents
Settlement agents are there to ensure the transfer of titles and other checks
are completed when purchasing a property.
They charge a fee for their service and any fees they encounter when
performing property searches or other registrations/checks.
Stamp Duty / Estate Tax
This is a government tax that is placed on the transfer of property owners. It
is used to certify that the documents of transfer are legal. This tax is
normally a percentage based on the value of the transfer. So the more the
property is worth, the higher this tax will be.
Agent Fees
Real Estate agents perform a necessary function of selling a home. To do this
they place advertisements, perform home opens and communicate with potential
buyers. They do all of this for no upfront cost, but normally require a
percentage of the purchase of the purchase price of the home. In this scenario
the real estate agent is trying to get the highest value for the property and is
working completely for the seller. Their percentages vary greatly across the
world so check locally how much they normally charge.
Capital Gains Tax
Capital gains tax is applied when you purchase a property and sell it for a
profit, normally many years down the track. This tax rate is normally different
than your income tax rate and should be investigated. A tax rate of 48.5% could
apply on any received capital gains and hence there is half of your profit gone.
Make sure this is calculated in each property decision.