Tuesday, March 28, 2017

Risks When Buying New and old properties

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When you purchase a property, whether for investment or to live in, there are always risks involved.

As an astute buyer, it’s up to you to do as much as you can to mitigate these risks. This is where having an experienced conveyancer on your team can really pay dividends, as we can help you review the risks and mitigate them if required.

Here are a few of the most common risks you might face when buying property, and how to mitigate them:

3 Risks when buying new properties

  1. Building or structural issues: Just because a property is new, that doesn’t mean it’s going to be completely free of faults and issues. If the builder has cut corners or taken shortcuts, it could result in costly and time-consuming repairs, not to mention the hassle of chasing the builder for rectification work.

    Mitigate this by: Asking questions about the builder. Do they have a good reputation and a strong track record for delivering quality projects?
  2. Low capital growth: Some buyers purchase real estate ‘off the plan’ in the hope that the property’s value will increase by the time it is constructed. If this fails to eventuate, they can find themselves financially tied to a property they can’t afford, as it may be difficult to secure finance for the full amount.

    Mitigate this by: Ensuring you don’t sign a contract on a property that you can’t afford to settle. You should have access to enough funds to settle the purchase even if no growth happens between contract date and settlement.
  3. No ‘unique factor’: Some larger off the plan developments can deliver dozens or scores of identical properties to the market. These are all similar homes and it can therefore be difficult to set yourself apart from the competition when trying to find a tenant or buyer.

    Mitigate this by: Redirecting your search to smaller, boutique property projects with 20 or less units within the building.

3 Risks when buying older properties

  1. Hidden damage: Sometimes, this can be as low risk as the cupboards being a little mouldy inside. Other times, this could mean there are substantial structural issues that could cost tens of thousands of dollars to repair.

    Mitigate this by: Having a professional building and pest inspection carried out on the property before you buy. Be sure to go through the results of the inspection with your conveyancer, so you can identify any areas of concern.
  2. Low depreciation: When you’re purchasing a property to invest in, part of the tax benefit you will derive is generated from depreciation. This is a tax deduction that allows you to legally claim your property’s depreciation in value as it gets older. Obviously, the older the property, the lower the depreciation benefits, which makes the investment less profitable for you.

    Mitigate this by: Ensuring you can afford to own the property before any tax incentives have been factored in. You could also consider investing in properties that have been renovated, as they would potentially offer higher depreciation benefits.
  3. Smaller returns: Given the choice between living in a new property and an older one, most people would choose the more modern accommodation. As a result, in many real estate markets newer properties can attract a premium rental return of 20-50% more than similar, older-style properties in the same suburb.

    Mitigate this by: Investing in good quality properties that are either newly renovated (or have renovation potential), with plenty of features and amenities that local renters are looking for.

These are just some of the risks of investing in different types of properties and ultimately, the right property decision for you will depend on a number of personal factors. As conveyancers, we are part of your team of experts on hand to help you make informed property decisions. If you have any questions or wish to discuss your situation in further detail, please contact our friendly team on 1300 932 738. You can also contact us online here.

Monday, March 6, 2017

Conveyancing and Tax: What Can You Claim on Your Tax Return?

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Australia may be one of the only countries in the world where its people look forward to tax time. At least, Australian property investors do; they are always excited about end of financial year, because property investors have access to numerous tax deductions!

While it’s true that many of the fees involved in property investments are tax deductible, some of the expenses you incur as a landlord are not in fact allowable deductions.
According to the Australian Taxation Office, there are three main types of rental expenses:

  1. Those that cannot be claimed
  2. Those that can be claimed as immediate deductions
  3. Those that can be claimed as a deduction over a number of years

Those that can be claimed immediately means that they will be reflected on the income year that the costs were incurred. These may include bank charges, body corporate fees and charges, council rates and insurance. You may also claim the cost of advertising for tenants, and you can claim interest charges incurred on loans, as long as the property is being rented or is available for rent.

But can you claim your conveyancing fees?

According to the ATO, you may immediately claim some legal costs and lease document expenses, as long as these were incurred in the course of renting out an investment property.

However, broadly speaking, conveyancing fees (and other expenses like stamp duty) charged on the transfer of the property cannot be claimed as deductions.

This is because these expenses are considered to be costs incurred on the purchase and sale of your property, rather than costs that incurred as part of owning your income producing asset. As such, they are deemed to be ‘capital costs’ and are not deductible.

However, all is not lost – you don’t lose out on tax benefits altogether. Instead of being able to claim an immediate deduction, your conveyancing costs will form part of the cost base of your property. This is important, as when it comes time to pay capital gains tax upon the sale of your investment, any money you have spent on conveyancing can be taken into account for the purpose of reducing your tax liability.

Keep in mind that legal expenses incurred during the management of your property are entirely different, and may be tax deductible immediately. Running costs are considered by the ATO to be those that are incurred to maintain the property. For instance, legal expenses associated with the lease would be considered a running cost and would therefore be tax deductible against the rental received.

What are the differences between a conveyancer and a solicitor? Learn more here.

Working out your tax rights and responsibilities can be complicated and at Think Conveyancing, we always advise our clients to seek out the services of an experienced accountant to help you maximize your tax return. Of course, we’re always happy to help with any aspect of our conveyancing requirements, so for more information on our services, please contact our friendly team on 1300 932 738. You can also contact us online here.

Tuesday, February 28, 2017

9 Property Contract Phrases Explained In Layman Terms

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Property contracts can be hard to decipher by yourself, which is why it makes good sense to hire a conveyancer to help you navigate the path forward.

Still, it doesn’t hurt to educate yourself about the common terms that you might find in your contract of sale, so following are a dozen of the most common:

Certificate of Title

The Certificate of Title is a document that shows the location, volume and current ownership of a given property. It also shows easements, covenants, mortgages, and other third party interests in the land. Every time the property is sold to another owner, the name of the new owner is registered on the Certificate of Title.

As the owner or mortgagee of a property, you are given an official duplicate of the Certificate of Title, while the original is held at the Land Titles Office.
However, as the conveyancing process is now moving towards becoming paperless, the issuance of paper Certificates of Title is slowly phasing out and the Land Titles Office is working with most major banks to convert paper Certificates of Title to electronic Certificates of Title.

Contract of sale

A contract of sale is a legal contract that outlines the exchange of property from the seller, also known as a vendor, to the buyer. It outlines information such as the purchase price, special conditions, and finance arrangements.

Conveyancing

Conveyancing is the legal process of transferring the title of a property from one person to another. Where this is pursuant to a sale and purchase transaction, it involves drawing up and carrying out a written contract that includes the agreed purchase price, date of transfer, and obligations of both parties.
Conveyancing also needs to be undertaken for mere transfers where there is no ‘buyer’ or ‘seller’ per se (e.g. transfer between spouses, ex-spouses or family members without any purchase price).

Cooling off period

As a consumer, you may (subject to certain conditions being met) have the right to change your mind during the cooling off period following your agreement (via signing a written contract of sale) to purchase a property. Depending on the state or territory you’re in, the cooling off period varies and you also may be required to pay a fee to walk away from your contract during the cooling off period. For instance, in Queensland the cooling off period is five business days, and the fee is 0.25% of the purchase price.

However, there are circumstances where you may not be entitled to a cooling off period. A common example of this is where the property is bought under auction or where the buyer is a company.

Easement

An easement is the right of a person to use part of another person’s property for a specific purpose, usually for an agreed fee. It also refers to the right to prevent the property owner from using a part of their property in a particular manner.
Easements, like a right of way or utility and sewer lines access, can affect the value of a property and restrict the manner in which the property is used, so it should be duly consulted with a conveyancer.

Encumbrance

An encumbrance is a claim against a property by a party who is not the owner. It refers to any obstacle that may become known during a transfer of land, like easements, mortgages, leases, covenants and caveats.

Mortgage

If a loan borrower defaults in payment under the loan contract, the mortgage gives the creditor the legal right to sell the borrower’s property in order to reclaim the amount owing to them.

The buyer’s conveyancer should always ensure that the seller’s mortgage is discharged at settlement so the new owner does not take on the previous owner’s mortgage.

Settlement date

The settlement date is the date on which the property title is legally and officially transferred to the buyer. The balance of the purchase price and any financial adjustments and payments, like land taxes and council rates, will be made on the settlement date. Once a settlement is confirmed to have successfully occurred, the buyer may arrange with the agent to pick up the keys.

Strata title

Strata title is a form of ownership created for multi-level apartment blocks and horizontal subdivisions with shared areas like swimming pools and car parks. In other words, these properties consist of individual properties – like apartments and garages – and common areas – like driveways and gardens. When you purchase strata titled property, your conveyancer will review extra documentation such as the Owners Corporation’s Certificate in the disclosure statements, to check for potential risks such as large upcoming expenses i.e. Repainting the complex, replacing the roof, etc.

These are just some of the terms and phrases you might come across during your property transaction. If you have any questions or would like any terms explained to you, you can contact our friendly team at Think Conveyancing on 1300 932 738, or contact us online here.

Tuesday, February 21, 2017

5 Interview Questions To Ask Your Conveyancer

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Buying a house is one of the biggest investments you’ll make in your life, so it’s important that the purchasing process runs smoothly. Key to this process is your conveyancer, as they make sure the legal transfer between the seller and buyer goes off without a hitch.

To help you choose an experienced conveyancer, here are five interview questions that you should consider asking before hiring:

  1. What are your qualifications?

    Though this might seem obvious, many first home buyers often forget to ask this simple question.

    The qualifications of your conveyancer will differ from state to state, but all states and territories require some sort of tertiary qualification of licensed conveyancers. An example of this is an Advanced Diploma of Conveyancing. They should also commit to regular ongoing education to keep up with the dynamic property legislation landscape.

  2. Are you a member of the Australian Institute of Conveyancers?

    It is important to make sure the conveyancer you’re dealing with is appropriately registered.

    As the official national body for conveyancers, the Australian Institute of Conveyancers (AIC) makes sure that each of its members upholds certain professional, educational and ethical ideals and standards. The AIC also has local branches in each state, and these divisions provide a wide variety of services and resources to its members.

  3. Do you offer online conveyancing?

    Also known as electronic conveyancing or e-conveyancing, online conveyancing allows parties to log in from anywhere in the world to monitor their conveyancing transactions and share documents. Such technology allows for faster communication, not just between you and your conveyancer, but also your seller, brokers, lenders, real estate agents, and accountants.

    This is the future of the profession, which is why Think Conveyancing have invested our resources heavily in this space. Feel free to ask our friendly team how we can help you streamline your property purchase or sale with digital conveyancing tools!

  4. How much will your conveyancing services cost?

    The cost of conveyancing services is perhaps one of the most important questions that you should ask your conveyancer, as this will play a role in your decision-making process. You also need to be able to budget, so don’t be afraid to ask this question upfront.

    Your conveyancer’s quote may include their professional fees, search fees, and other disbursements fees like registration fees and stamp duty charges. Aside from asking for the breakdown of costs, make sure you know which services are out of scope, as they may incur extra fees.

  5. Do you have insurance protection?

    Professional indemnity insurance protects against claims that may arise from negligence in your conveyancer’s performance of his or her professional duties. No matter how meticulous you are in choosing your conveyancer, you cannot discount the risk that something might go wrong in your conveyancing process due to your conveyancer’s negligence.

    Having an insurance ensures that you are covered in such cases. They will be able to pay you for damages if you file a claim against them.

At Think Conveyancing, we have full insurance and accreditation Australia-wide. For more information about our services, experience or fees, don’t hesitate to contact our friendly team on 1300 932 738 or contact us online here.

Monday, February 13, 2017

How Much Should A Conveyancer Cost?

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When choosing a conveyancer for your property purchase or sale, it’s always a good idea to consider their experience and reputation. That said, an important factor that could sway you from one conveyancer to another is the price.

So how much should you expect to pay for professional conveyancing, and how can you tell if you’re being ‘ripped off’?

Many conveyancers provide their services for a fixed fee (plus searches and disbursements). The amount will vary depending on the property, the conveyancer and the complexity of the transaction; when you’re requesting a quote, your conveyancer will ask for more information so they can provide more accurate estimates of the costs involved.

Depending on the conveyancer, some will charge a flat fee, while others operate under a sliding fee structure, depending on the property’s sale price. Either way, you can request a written quote in writing when you first enquire.

If you’ve been quoted an unusually high figure, this could be because there are complicated contract clauses and other issues for your conveyancer to navigate. If it is a straightforward transaction, however, and you feel the quote you’ve received is high, then you may want to shop around.

To avoid being blindsided by an unexpectedly high conveyancing bill, it’s advisable to ask for a written quote prior to engaging services. The cheapest quote is not always the best one, as it’s important to engage with a conveyancer who can provide you with the level of service you need.

When you’re evaluating quotes, also keep in mind that a number of factors that can affect conveyancing costs, such as:

  • Scope of conveyancing
  • The more services they offer, the more expensive your fees may be – but it’s all worth it when you realise that their job is to protect you in your purchase.

    One of the services that all conveyancers should offer is reviewing your contract, which enables you to know if there are any risks associated with your purchase.

    Conveyancers should also research the property, particularly the title, council rates, and land tax, to ensure that you don’t inherit any of the seller’s debts. Just as importantly, they’ll make sure there is no third party blocking you from becoming the new property owner.

    Other services that your conveyancer might offer include contacting your lender for your financing needs; advising you of your stamp duty payable and any available concessions; preparing all of your necessary transfer documentation; and lodging a Caveat – that is, registering your name as a Caveator on title to secure the property by preventing any other dealings from being registered on the title before settlement.

  • Disbursements

Disbursements are the charges incurred by your conveyancer from third party services on your behalf. While some conveyancers will provide an exact figure on their quote regarding the cost of such disbursements, some items are difficult to estimate beforehand and so a ‘cost range’ for items like property search costs and inspection fees will be offered.

Examples of disbursements include title searches, stamp duty, land tax, inspection fees, loan fees, building insurance, council rates, water rates and strata levies.

Costs like building certificates, land tax certificates, and government fees to the Environmental Protection Authority and Roads and Traffic Authority usually have fee ranges.

At Think Conveyancing, transparency and integrity are our key values. To get in contact with our friendly team today about your conveyancing needs, call us on 1300 932 738, or request a free quote online.

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Thursday, February 9, 2017

INFOGRAPHIC: Property Selling Conveyancing Process

Property Selling Conveyancing Process Infographic

For more information about our services, experience or fees, don’t hesitate to contact our friendly team on 1300 932 738. You can also contact us online here.