The Deadly Trio Of Fee, CGT, and Stamp Duty
Going by an article on the website Smart Property Investment, fee and taxes are prime concerns of home buyers. According to the article, a highly esteemed loan comparison website, finder.com.au, evaluated 7,000 questions on home loans (those which were posted in its forums). The website inferred that maximum concerns were related to fee. Fee included set-up fee as well as loan pre-closure fee.
Tax is the second-most important concern
Just on the heels of fee, there is another great concern for home buyers- Taxes. Taxes chiefly comprise of Stamp Duty and Capital Gains Tax.
Loan seekers were also bothered about the cost of refinancing and loan switching. Fear of fear is greater than fear itself. The borrowers shrink in anticipation of costs they may have to incur while changing their home loans.
Ignorance in many aspects
Home buyers are clearly nonplussed when it comes to understanding their tax requirements. Take the instance of Stamp Duty. Many of them just do not know how to calculate the duty on a new mortgage.
You can read the original article here.
Exorbitant Stamp Duty
I think Australians really have enough reason to feel bad about the Stamp Duty. A property valued a little over A$100,000 comes with a Stamp Duty of 3.5%. This is too exorbitant when you compare the figure to the more general 1%, followed almost all across the globe.
However, with the government siphoning in surplus of a billion dollar each year through Stamp Duty, the regulations are likely to stay for eternity.
Pre-closure penalties are a shame
I have always thought that it’s a shame to levy pre-closure penalty on home loans. Such moves should be rewarded on the contrary. While I understand that the pre-closure moves hurt the economic dynamics of the lending organisations, the firms should certainly ponder deeply on the unfair costs involved in the process.