As many property investors know, the city you currently call home isn’t always the best place to invest.
You’ve done your research – picked out the potential growth areas, drawn up your budget and growth expectations, and are now preparing to invest interstate. But there are many steps to the buying process, and they can differ from state to state. Here are some key differences in purchasing properties interstate.
Purchasing interstate is a great way to spread risk across your property’s portfolio or capitalise on growth areas – just make sure you do your homework. I would always recommend a building and pest inspection for any property but this goes doubly so for an interstate property that you haven’t seen.
Cooling off period
Not all buyers have the luxury of a cooling off period, with legislation changing from state to state. During a cooling off period, a buyer can change their mind about purchasing a property and only face a small fee (0.25% of the purchase price or less) so long as they provide written notice to the vendor or their agent.
In Victoria, there is no cooling off period for properties purchased at auction. There’s a three day cooling off period for private sales of residential properties of less than 20 hectares, but this is waived if the property is sold three days before or after a scheduled auction. The cooling off period is also waived if a buyer is represented by an agent.
The ACT, NSW and Queensland all have five day cooling off periods for residential property purchases at private sales, but not for auction sales. Generally the cooling off period begins from the day that the buyer or their agent receives a copy of the sales contract that has been signed by both the buyer and the seller.
South Australian property sales come with a cooling off period of two days. If a Form 1 is provided before the sale, then the cooling off period commences on the date the contract is signed. If the Form 1 is served after the contract is signed, the cooling off period begins on the day the form is served.
Investors buying in Western Australia and South Australia aren’t allowed cooling off periods.
Stamp duty or land transfer tax
Don’t forget that stamp duty or land transfer taxes change from state to state, and depend your property’s intended purpose. Each state’s revenue office website has a stamp duty calculator that can help you estimate how much you’ll be charged.
Use a local conveyancer
Purchasing a property interstate can be a difficult task, especially if you’re not an experienced investor and you’re looking to invest in a state you haven’t lived in before. The best way to ensure you have all the aspects of your investment covered is to engage a local conveyancer, they have local knowledge on all aspects of the property purchase process.