Government fees when selling a house in Queensland, Australia, are substantial. While the excitement of selling your residential property is palpable, you definitely need to have all the details of the charges associated with the sale process and have a better understanding of all the variables involved.
Continue reading to have an upfront know-how of various government fees for selling a house in the state.
Government Fees When Selling a House in Queensland
Land Tax
When selling your home, it is best to have an understanding of the land tax liability to avoid last-minute fees for the sale of your house. All property owners in the country are liable to pay the annual land tax, an important part of government fees when selling a house. Whether the land is owned or co-owned, this compulsory tax must be borne for land values beyond a certain amount.
In Queensland, owners need to pay land tax if the total taxable value as of 30 June is $600,000 or more. This applies to freehold land, which is land owned and co-owned by the homeowner. The Valuer-General does the annual land valuation of your land. A home exemption on the land tax is possible if you have a home on the land or part of it.
Capital Gains Tax (CGT)
CGT is levied on the profits that homeowners earn from selling their houses in Queensland. However, if the property is the primary residence of the owner and it is being sold, CGT is not applicable. It means that you pay Capital Gains Tax only if the property being sold is an investment property.
CGT fees are based on a few variables -
● The cost of buying and selling the specific property
● Tenure of ownership
● The marginal tax rate.
Can you offset the CGT? Yes. If, as an owner, you incur any capital losses from other sources, the capital gains get offset. CGT can be reduced, too. You can account for expenses towards repairs and depreciation costs of the property during your ownership tenure.
Another way to reduce the impact of CGT is through Primary Residence Exemption. If the owner is selling their primary residence, no tax is levied. However, this is subject to certain conditions. The owner should be residing in the said property during the ownership tenure, and should be using the address as their residential address. All utility accounts should be registered at this address. The place should have the belongings of the owner.
Owners of secondary or investment property can reduce the impact of this government fee when selling a house by availing of CGT discounts, subject to certain eligibility criteria. The seller must own the property for at least 12 months. Discounts up to 50% can be availed provided the owner is an individual resident taxpayer.
Council Rates & Water Charges
An essential aspect of the Queensland government fees when selling a house is the council rates and water charges. All outstanding charges need to be paid by you before the sale date. It is an annual tax levied by the government, and all property owners need to clear their dues before the sale of the property.
Apartment or flat owners pay the corporate fees, while property owners pay the council rates. Awareness of these charges helps you as a seller avoid additional expenditures at the last minute and delays to the sale process.
Goods and Services Tax (GST)
A value-added tax called Goods and Services Tax is applicable to all items sold in Queensland. These items could be goods or services. The current GST rate in the country is 10%.
In the case of the sale of your home, GST is mainly applicable when a new property is being sold. Even though GST is applicable for buyers, it can significantly increase the cost of the property for the buyer. As a seller, it is a good idea to have complete knowledge of the applicable GST rates in your state as you can then strategize and pride accordingly, placing you in a better position to negotiate with the buyer.
Conveyancing Fees
When selling a house, it is imperative that you hire a licensed conveyancer. The conveyancing fees usually range between $700 and $1,300. This fee is mandatory and must be paid when a property is sold. The conveyancer handles the legal documentation work involved with transferring the ownership legally to the buyer of the property.
Depending on the property’s location, sellers hire either a conveyancer or a solicitor for the job. In Queensland, a solicitor can do the work, while in the other states, a conveyancer or solicitor needs to be appointed.
Mortgage Discharge Fees
As a homeowner and a seller, if you have an ongoing home loan on the said property, you need to settle the mortgage discharge fee or early exit fee to the lender or the financial institution before the sale happens. It is a fee that is charged if the existing loan is being settled in advance and is usually between $150 and $1000. The fee is usually charged to cover administration costs.
Conclusion
House selling fees include legal and conveyancing fees, Land Tax, Capital Gains Tax, Council Rates and water Charges, mortgage discharge fees, and Goods and Services Tax. The best way to minimize these fees is to focus on the sale timing and being well-versed in government fees when selling a house in Queensland.
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