Delaying Settlement 2012 Stamp duty NSW First Home

C

christos

Hi all,

Its 2012 and with all the changes in NSW to stamp duty what do people think around best thing to do around purchasing a PPOR for a first home buyer on an existing home?

Wait and see what happens in Feb 2012 and later?

Finally have funds for a deposit due to windfall in the new year but looking at delaying settlement for as long as possible in order to keep money in my pocket earning interst before handing over to the gov....
 
You'll need to find a vendor interested in a delayed settlement. What length of period are you expecting: weeks or months?

As for what happens in 2012... all the First Home Buyers have had their feeding frenzy already and, from what REAs have been telling me, generally over-paid by more than what they saved in stamp duty. Now that they are gone it'll be a good time to buy.

Wait too long and the bargains will be gone.

Don't be penny wise and pound foolish with the house purchase.
 
Agree - properties were selling for too much at the end there. Looking probably at a 90 or 120 day settlement which may be attractive to some vendors giving them some time to find something whilst allowing more time to put off paying stamp duty and hopefully getting some CG in the interim.

I understand stamp duty needs to be paid within 3 months of contract exchange in NSW and if borrowing before settlement. Is this correct?
 
I have no idea about the stamp duty -- my solicitor handles all that.

Regarding the late settlement, if the vendor wanted it then it would already be in the contract as a condition.

I don't understand your obsession with saving a few dollars by delaying the settlement. Capital gain in 2 months? LOL.

IMHO yo've taken your eyes off the ball. Just buy a house already. :D
 
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How much do you think you're going to save by delaying settlement?

Say you have stamp duty of $8,000 on a purchase ... that equates to $100 at 5% for 3 months. What is the point of mucking around a purchaser (and potentially costing you the deal) for $100.

Even if you're buying something more expensive for a first home, and stamp duty is around $25,000 ... you're still only making an extra $300 by delaying settlment.

Unless you have some secret formula for doubling your money every month, I wouldn't stress over it.
 
I think OP means saving on interest earned from the deposit saved (rather than stamp duty). In other words, if OP has 50k deposit - that equates to $625 for 3 months at 5%.

In any instance, as others have mentioned - just buy the place already. If its not a long term PPOR, the quicker you settle, the quicker you can move out and turn it into an IP and get some rent :)
 
Sorry I should have elaborated more on this in the original query.

My issue is more around not having all the stamp duty + deposit $$ required at time of purchase and by extending the settlement out to three months would allow me more time to save that part as well as making some savings in interest and yes any small or negligble increases in CG.

I am unclear about if you have to have all the stamp duty money ready as well + deposit upfront or whether this can come later and you just have to demonstrate that you will be able to pay that when it is due.

Would look to buy house in the 550K-600K range which will mean stamp duty of approx 20K-23K + approx deposit of $27K-30K (total needed $53K).

Today I have a deposit of $37K which satisfies the minimum deposit (5%) part but leaves me about 16K shy to pay the stamp duty as well but I will have this saved in 2-3 months and hence the reason to push out the settlement but still try to buy as soon as possible.
 
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Deposit is meant to be paid on contract exchange - so this would be at the beginning of the process ... however ... you can as your mortgage broker about a deposit bond (but you may not get it).

A deposit bond is where you pay a small fee and the bond company guarantees payment of the deposit if you default and then come chasing you for the money. Bit like insurance. You do have to prove that you have the money for the deposit before they will give you the bond tho. Then you don't have to physically pay the deposit money until settlement (you don't get your deposit bond fee back).

Stamp duty is usually paid on settlement by your solicitor, but your solicitor usually asks for it to forward it to them a few weeks in advance to make sure they have the money on hand.

I don't really know the Sydney market - but perhaps it might take you 3 months to find the right place anyhow. Spend that time looking, so you know the market inside out and what is a good deal, and learning, SS is a great start and a fount of knowledge.
 
christos said:
Sorry I should have elaborated more on this in the original query.

My issue is more around not having all the stamp duty + deposit $$ required at time of purchase and by extending the settlement out to three months would allow me more time to save that part as well as making some savings in interest and yes any small or negligble increases in CG.

I am unclear about if you have to have all the stamp duty money ready as well + deposit upfront or whether this can come later and you just have to demonstrate that you will be able to pay that when it is due.

Would look to buy house in the 550K-600K range which will mean stamp duty of approx 20K-23K + approx deposit of $27K-30K (total needed $53K).

Today I have a deposit of $37K which satisfies the minimum deposit (5%) part but leaves me about 16K shy to pay the stamp duty as well but I will have this saved in 2-3 months and hence the reason to push out the settlement but still try to buy as soon as possible.
Click to expand...

Hi Christos

You can certainly attempt to negotiate a longer settlement but you will find that the majority of vendors just want to move on in the standard 6 weeks. Also be aware that not all vendors will accept a lower 5% deposit- it's up to them whether or not to accept.

I'd suggest organising your loan first to see if you are able to qualify for a higher % loan to ease the pressure on your initial cash-flow. Best of luck with your search.
 
Thanks all. Yes I am getting a deposit bond through broker. The 5% deposit was in order to get a loan (at 95% LVR)

Yes the search will probably take 2-3 months anyway so probably all good....
 
christos said:
... looking at delaying settlement for as long as possible in order to keep money in my pocket earning interst before handing over to the gov....
Click to expand...

Stamp duty (SD) in NSW is payable before settlment or witin 3 months of exchange of contracts whichever occurs first. So even on a delayed settlement say of 6 months, this won't help you delay SD beyond the 3 month stage.
 
christos said:
Thanks all. Yes I am getting a deposit bond through broker. The 5% deposit was in order to get a loan (at 95% LVR)

Yes the search will probably take 2-3 months anyway so probably all good....
Click to expand...

Hi Christos

Be aware that DP's do incur a fee and a 95% loan will incur LMI (just in case you didn't know). You also need to allow another $2K for conveyancing costs and inspections. Best of luck with it all :)
 
Can you get a deposit bond if you have most of the deposit (but not all) saved, don't own other property but have a good income and savings record which shows that you'd be able to pay it back by settlement?
 
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