Sunday, December 14, 2014

Property? Don't Forget the Duty!

As some of you might know, I am looking to get a property of my own. I am in the midst of shortlisting properties and figuring out the DIY procedure, so that when (note: not if) the property crash comes, I will be researched and well-prepared to squeeze all those poor sad sods with weak holding power forced to fire sale their poor investment decision for the absolute very best price that I can get.

We're talking about possibly a huge amount of money saved, which to me, I like to translate to how many months and years I would be slaving away at my job to save up that amount. It is sad, but one man's loss is another man's gain. Not many things in life are win-win.

Anyway, when the property market crashes, I realised that there is a few things to note about duty!

1) Seller's Stamp Duty (SSD)



Property that was bought after 13 Jan 2011 that are being resold will be liable for SSD. That means that any recently launched property that you are looking to buy over, the seller has already probably baked in the effects of the SSD into his selling price.

I think this is especially useful because many people don't like to psychologically sell at a loss. So if you can work out what was their rough purchase price with the SSD, that might be a price many are willing to take to quickly exit their position and just be breakeven instead.

This SSD is going to be a real bitch for people who bought investment properties recently that cannot find any tenants and are just bleeding out slowly.

2) Buyer's Stamp Duty


Basically, only the 1st column concerns me, however for the sake of people wanting to buy an investment property and this downturn too, I've left that column intact for your reference

1% of the first $180,000 = $1,800
2% of the next $180,000 = $3,600
That gives you $5,400 of BSD on the first $360,000 of a property,

So, any property above $360,000 (which is probably any condo) will have their BSD forumla as such:

BSD = (Property price - $360,000)*3% + $5,400

A necessary cost and evil in anyone's purchase of a property.

So, that's it for stamp duty. I am going to write another property related post tomorrow that has been on my mind for a while. Anyway, enjoy the rest of the weekend!

2 comments:

  1. Hi GMGH

    I have also been keeping a close lookout on properties for the past 3 years or so.

    I have gone through all the cooling measures related so these few months I am focusing more on the projects (visiting on site, etc) that provide more value. When (and not if) property value does look reasonable, I can go in with an idea of how the different project looks appealing to me. As you said, it's a large amount for property play and we can only choose one, the only right one.

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    Replies
    1. Hi B,

      I see you're way ahead of me on the curve! I must read up more and catch up! Site visits has only just crossed my mind, I'll be heading out to prospect a neighbourhood later.

      Aye, a fully owned property is very likely to be the largest single expense/investment (depending on personal use or as investment property) that a person would make in their lifetime. Can you imagine putting down the entire amount equal to a 20% home deposit on a single stock? The only way we can make sure that our 1 single shot is really 1 shot 1 kill is to really get down and dirty and do the ground work. No one cares more about our own money than ourselves :)

      Good luck to us B!

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