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Stamp duty WA and first homeowners

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Jane | 03 Jun 2013, 11:36 PM Agree 0
We currently rent for 320 pw in the WA town of Bunbury and would at some point like to buy our own home but are thinking of buying a 3 bed house on 600 sq for 200.000 in the area of Carey Park as an investment. The rent on such property would be around 290 pw. We have a combined income of 100.000 and are aiming to save 15.000 by years end for investment property. We have no other debt. My question is. I would pay over 5000 in stamp duty on this investment property and 0 on a home we occupied. Also am I right in assuming the first home owners grant is for properties you live in as we would like to buy a live in a year after the investment property, does this sound viable as people think I'm mad for even talking about buying an investment property before our own place which we would be looking at around 350-400 thou.
  • Eos Property | 04 Jun 2013, 11:07 PM Agree 0
    Hi Jane,

    Stamp duty and other govt charges on a $200K property in WA will put you back around $6.2K.

    If the property is your first home (neither you, nor your partner can previously have owned and lived in a property to be eligible for FHOG) you may be eligible for the WA FHOG incentives. These amount to $7K & stamp duty exemption.

    Only you can answer the question about buying an investment or home first. I have seen countless sensible arguments for each option. I suggest you look at what your long term goals are and then work backwards from there. Certainly an investment property has tax advantages while owning your own home has emotional advantages - only you and your partner will know which is more important to you both.

    To be honest, based on the limited information provided, I suspect you will not be able to afford to buy two properties within a 12 month (or thereabouts) timeframe. Your greatest hurdle is going to be in a position to get a sufficient deposit together either through savings or capital growth.
  • Deborah Petlueng | 06 Jun 2013, 10:35 PM Agree 0
    Hi Jane

    Buying an investment property first can be a good idea, if that property is able to have value added to it over that year so you can then revalue it, take some funds from the revalue, and use those funds to deposit on your own home.
    An investment needs to gain in value either through renovating it, or buying in an area that has high capital growth potential over that year. Gaining value by doing a renno is a more sure way of doing ti though .You need to look for a property that is in a good area, and because it is shabby and tired, can gain value by a cosmetic renno. Before you buy compare the price of a 'nice 'house in the area, and a 'shabby' house , and work out if the price difference is enough for you to make a gain in value through renno .Also be careful abut your renno budget .As a rule do not plan to spend more than about 10% of the value of a house on a cosmetic renno .
    If you say bought for 250,000- spent 25,000 on a renno, and then had the bank revalue the house at 335,000, then you have gained 60,000 in equity which the bank may then allow you to redraw as a deposit for the next house.
    You also need to be careful with an investment that the rent covers all outgoings (interest, rates, insurance, water, etc) The bank will not look favourably at another purchase if you are holding a negative cashflow investment.
    Having said all this, you could do a renno to gain value and redraw equity on either your own home first, or an investment first. Either way, if you want to buy a second property, you need to find a way to increase the value of the first for redraw (or save lots which takes longer)
    Good luck
  • Steve | 21 Dec 2014, 08:17 PM Agree 0
    Hi, what did you decide to do Jane?

  • Steve | 21 Dec 2014, 08:19 PM Agree 0
    What did u end up doing Jane?
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