When you are interested in buying a commercial property, there are many factors to consider, especially as it relates to cost. Both up front and over the long run, there are many hidden expenses associated with buying and owning a commercial space, and stamp duty is among the biggest you'll encounter.
Whether you're buying commercial property in whole or as part of a partnership, you will be required to pay stamp duty either at the time the property transfers to your name or shortly thereafter. Real Commercial noted that there is no hard and fast number as to what you can expect to pay, as rules can change based on a wide variety of factors. In some places, the stamp duty can be as little as 1% of the value of the property (or what you paid for it, depending on which is higher) while in others, it can be more than 6%.
However, there are other factors to calculate as well.
Your stamp duty obligations will also be based on how you intend to use the property and if it will be your primary residence. In addition, if you live outside Australia but are buying the property there, you will likely have to pay more. On the other hand, first-time buyers may face lower stamp tax rates.
The good news is that the government also provides you with a free calculator that will allow you to figure out your financial obligations on this front. While you may not be able to figure out exactly what the number is, even a rough estimate could go a long way toward helping you prepare financially for the cost of buying commercial property.
However, you will potentially be able to qualify for exemptions and concessions that could bring your stamp duty costs back down. In general, your conveyancer or solicitor will be able to determine what you may be eligible for, but these can also vary by the state or territory you're buying in. For instance, advisors Stanley & Williamson note that if you are able to qualify for a "going concern" exemption, it could potentially save you a fair bit of money.
Furthermore, you will not have to pay stamp duty if a family home is transferred between you and your spouse. For other family members, the price of the property will be based on the market value and not the price paid (if there was one).
Working with seasoned professionals on any property purchase, especially when it comes to commercial transactions, is always recommended. Even experienced commercial investors cannot be expected to know all the ins and outs of the applicable laws and rules that will apply to their unique plans or financial circumstances.
When it comes to stamp duty in particular, it is wise to consider this expense as part of the broader cost of making the purchase. By building even the estimated expense into your financial planning, you will be in a better position to find a property you can afford and ensure long-term success for the property.
If you are considering making a commercial property purchase in the near future, get in touch with the experts at Ray White Surfers Paradise. We have facilitated countless sales and will help ensure you know what is required of you at every step of the process. With that kind of guidance, you'll be more prepared for the ins and outs of owning a commercial property going forward.