If you’re looking to sell your property in Australia in 2016, here’s the good news – property prices in Australia are on a high and there has never been a better time to sell. You are guaranteed to get a great price for your property, especially if it is located in Sydney or Melbourne, which are two of the most expensive cities in the world.
To begin with the sale, it is important to carry out an accurate valuation of the property, which is why you need to hire an estate agent for the purpose. For sure, estate agents charge a commission, but it’s more than worth it, considering the benefits of hiring them.
There are generally two ways of selling a house in Australia. One is to do so using a “private treaty” where the seller sets the price and invites bids from buyers. The second method is to sell the property through an auction. Regardless of which method you choose to complete the sale, it is always better to hire an estate agent to help with the process.
Generally, sellers hold events such as “open for inspection” – which is basically an open day to market the house. Any prospective buyer can visit to view the property on this day. Viewings by appointment are popular too. Usually the estate agent handles the visitors and takes them around the house on such occasions.
If you are selling your house at an auction, the auction has to be conducted by a professional, and not by you. For this, you will need to set a minimum reserve price and hope the bids are much higher than this. The house will be sold to the person who makes the highest bid. Once a final bid is made, it is legally binding and the person who makes it is obliged to purchase the house, no matter what. There is a cooling off period of 7 days in all states except in Western Australia and Tasmania, during which the buyer can change his mind.
If you sell the house privately, you will need to appoint a conveyance for the purpose. The person in charge of the conveyance handles the exchange of the contracts and everything related to the transfer of the property. You will need to supply the conveyance with all the proof needed to show that you are able to sell the property and that there are no debts on it. Usually it takes 30 to 45 days for the final settlement to take place.
What about capital gains tax? Capital gains tax won’t apply to your property in case it is your primary residence. But if it is your second home, you will need to pay capital gains tax on it. You will be required to pay this tax even if the property is your primary residence if it stands on over two hectares of land.
The amount of capital gains tax you pay depends on your capital gains in the base year in which the property is sold. You are entitled to obtain a discount of 50% on the capital gain if you have held the property for over 12 months. In case you sell it within 12 months of buying the property, then you don’t get any discount on the capital gains tax and will be charged at the maximum.
In case you have held the property for over 12 months, an indexation method is used to determine the capital gains tax to account for the inflation over the base price of the property. So if you happen to make a capital loss over the property, then this is deducted from the capital gains made from other sources. Please consult with a tax professional for the details on this.