The 4 Primary Costs When Selling Your Home and How Stamp Duty Affects Your Sale

Selling your home is one of the most significant financial decisions you'll make, and understanding the associated costs can empower you to set the right asking price and maximize your profit. One common point of confusion is stamp duty. Although this tax is imposed by the state government on property purchases—and is paid by the buyer—it can still impact the buyer’s offer, thereby indirectly affecting your sale.

Below, we break down the four main costs you should factor in when selling your house:

1. Agent Commissions

Real estate agent commissions can take a sizable cut from your profit margin. Typically ranging between 1.6% and 4% of the property sale price, these fees vary based on local market conditions and competitive dynamics. In highly competitive markets with many agents vying for listings, commissions may be on the lower side. It's essential to consider commission costs when planning your sale to ensure you retain as much profit as possible.

2. Legal Fees

Selling a property involves complex legal processes and documentation. A conveyancer or property solicitor is crucial in managing documents like the Section 32 Statement and Contract of Sale, ensuring that the transaction proceeds smoothly and that your legal interests are protected. Legal fees can differ significantly between practitioners, ranging from around $600 to $1500. It’s wise to obtain several quotes and compare services to get the best value.

3. Capital Gains Tax (CGT)

For investment properties, capital gains tax is a primary consideration. CGT is calculated on the difference between your initial purchase price (including any costs incurred for improvements) and the final sale price. If you sell your investment property within 12 months of purchase, you'll be liable for the full capital gain. However, if you hold the property for longer than 12 months, you may be eligible for a 50% discount on the capital gain after applying any capital losses. Note that CGT does not apply to your primary residence.

4. Property Repairs and Renovations

Enhancing your property's appeal can significantly influence its market value. Practical repairs, such as fixing a faulty garage door or broken fence, are often necessary. Additionally, cosmetic improvements—such as fresh paint, updated fixtures, or even hiring display furniture—can boost your property’s attractiveness to prospective buyers, potentially leading to a higher sale price. Balancing these costs against your expected returns is key to making your home market-ready.

Understanding these costs, along with the indirect effects of stamp duty on buyer offers, will help you craft a well-informed selling strategy. By budgeting for agent commissions, legal fees, CGT (for investment properties), and repair or renovation expenses, you can more accurately estimate your net profit and set realistic expectations for your sale.