When purchasing an investment property, stamp duty and lender’s mortgage insurance (LMI) can amount to tens of thousands of dollars; when selling, you’ll be handing over a decent sum of money in real estate commission.
Once you factor in capital gains tax upon selling — and, if you plan to purchase again, stamp duty on another property — it becomes clear that buying and selling real estate can be an expensive exercise.
The costs involved have increased significantly over time. For those who began investing in property years ago, the associated costs of buying and selling were far lower than they are today.
You might have paid $10,000 to $12,000 in stamp duty on a property with a purchase price of $350,000, and LMI of a few thousand dollars. Now, median values have grown and LMI has increased substantially since the GFC, so your acquisition expenses on an average priced property of $600,000 could easily exceed $25,000.
This creates uncertainty for investors who are considering selling. It’s not a decision that should be made lightly, and selling an investment property should only become an option if it really makes sense. But how do you know when this is?
When to consider selling
Keep in mind …
While you’re debating whether or not to sell your property, consider the following four points: