So you have entered into a contract for sale of land (Contract) in Western Australia. Congratulations! But what next?
This article sets out some of the matters to consider when buying and selling land in Western Australia.
Appoint a settlement agent or lawyer
In Western Australia, only a licenced settlement agent or lawyer can act for you in your conveyance of land. The main difference between employing a settlement agent as opposed to a lawyer is that a lawyer is able to give you legal advice, whereas a settlement agent cannot.
For a buyer, we suggest appointing a settlement agent or lawyer as soon as possible after entering into the Contract.
For a seller, you could wait until the Contract is unconditional, but there is no harm in appointing a settlement agent or lawyer immediately after entering into the Contract.
Pay the Deposit
If you are the buyer, don’t forget to pay the deposit as required by the Contract. For example, the Contract may require that the deposit is due to be paid to the seller’s real estate agent within 5 days after the contract date (being the date on which the last party to sign the Contract, signs it).
Contact your bank
If you are buying the property with the help of a bank or if the seller has a property which is encumbered by a mortgage, we suggest contacting your bank as soon as possible to let them know about the purchase or sale.
If you are the buyer and the offer is subject to finance approval, we suggest contacting your bank as soon as the property is under contract.
Your bank will usually ask that you complete a loan application form or similar to kickstart the finance process.
If your application is approved, your bank should provide you with a letter of approval. If your application is not approved, you bank should provide you with a letter of non-approval. In both cases, you should provide the letter of approval or non-approval to your settlement agent or lawyer.
If you are the seller, then after the Contract becomes unconditional (which might be immediately after entering into the Contract or later if the Contract is subject to finance) then usually you would need to complete a discharge authority form and lodge it with your bank.
Transfer duty is imposed upon agreements to transfer land in Western Australia.
It is the buyer’s obligation to lodge the dutiable instrument (usually the Contract) with RevenueWA and then once assessed for duty, it is the buyer’s liability to pay the duty. Your settlement agent or lawyer should guide you in relation to transfer duty lodgement and payment.
Don’t forget to include transfer duty when calculating how much you will need at settlement, eg if the purchase price is $450,000 then transfer duty (at the time of this article) is an additional $15,390.00 unless you are a first home buyer, in which case transfer duty could be reduced to $3,838.00 (being the first home owner rate of duty).
If you are a foreign buyer, then you may need to pay an amount additional to the transfer duty.
Try our Settlement Costs Calculator here to estimate the amount of transfer duty payable.
First home owner grant (FHOG)
If you are a first home owner, you may qualify for the FHOG (currently $10,000) if you are purchasing or building a new home.
If you receive the FHOG you may also be eligible for the first home owner rate of duty (see the above example first home owner rate of transfer duty).
Foreign resident capital gains withholding clearance certificate
If you are an Australia resident and you sell property for $750,000 or more, then you may need to obtain a Foreign resident capital gains withholding clearance certificate from the ATO.
Failure to obtain a clearance certificate may mean that the buyer is required to withhold a portion of the purchase price (currently 12.5%) and pay it the ATO.
You can apply for a clearance certificate from the ATO by using this link.
We suggest that the seller seek a clearance certificate as soon as possible to allow for ATO processing times.
With the festive season upon us, please allow for additional processing times (as some organisations close over the Christmas – New Year period) and the statutory holidays when calculating contract deadlines.
If you have any questions in relation to buying or selling land in Western Australia, please contact us here.