One of the first questions our real estate agents need to answer when meeting with a home owner is, when I sell my house, who pays what?
Wouldn’t life be simple if when you sold your house, you could just pay out your mortgage and bank what was left?
It would indeed, but that wouldn’t take account of all the people, businesses and government departments involved in the sale and legal transfer of property, all of whom are entitled to collect fees, charges or taxes for playing their part.
Home buyers pay fees too
The same is true of the other side of the equation—in acquiring a new home the buyer is responsible for paying a range of associated costs.
Collectively these costs can be substantial, so be sure that you have allowed for them in your budget before you negotiate a mortgage and sign a contract for a new home.
As starting points for budgeting, following are summaries of the expenses sellers and buyers can expect to face.
Consult an experienced local real estate agent, conveyancer and finance provider who will be able to expand on, clarify and quantify all the expenses you will incur in selling or buying your home or investment property.
When I sell my house, who pays what?
As the seller, you must pay:
- the outstanding balance of any mortgage
- bank fees to discharge the mortgage and release the certificate of title
- conveyancing fees for the sale of the property
- agent selling fees (including auctioneer’s fees, if applicable)
- costs of marketing the property
- Capital Gains Tax (CGT), if the property has not been your main residence for the entire time you have owned it. Read my summary of CGT exemption from last week, Capital Gains Tax and selling your home: When is it exempt?
- rates, taxes and strata levies (if applicable) up to the date of settlement
- final accounts for electricity, gas, phone and internet up to the date of disconnection or transfer
- insurance cover up until the date of settlement
- moving costs.
If you’re a seller, don’t skip the next list, because chances are you’ll be purchasing a new home yourself in the near future.
When I buy a house, who pays what?
As a home buyer, you are responsible for paying:
- pest and building inspection fees
- conveyancing fees for the purchase of the property
- search costs
- fees and charges to establish a mortgage
- lenders mortgage insurance (if required)
- state government stamp duty on the purchase price of the property
- Lands Titles Office (LTO) registration fees
- insurance cover from the date of settlement (including a component for the state government emergency services levy)
- adjusted rates, taxes and strata levies (if applicable) from the date of settlement
- fees for connecting services (electricity, phone, Internet etc.)
- moving costs.
To help offset their expenses, first home buyers of new (not established) residential properties may be eligible to receive a state government First Home Owner Grant (FHOG).
McGrath Real Estate has been helping people buy and sell properties in western and coastal Adelaide for more than four decades.
We know who pays what when a home changes hands and as part of our commitment to six-star service, we help our to clients to understand and plan for these expenses.