Should I sell my house or use the equity to build a property portfolio?

Cost of selling a house……

  • Agent's commission: The most significant cost of selling a house is usually the agent's commission, typically around 1-3% of the final sale price.

  • Advertising costs: Sellers are responsible for marketing their property, which may include professional photography, online listings, signage, and print advertising.

  • Conveyancing fees: Hiring a conveyancer or solicitor is essential to handle the legal paperwork involved in selling a property.

  • Property styling: Investing in property styling to enhance the presentation and appeal of your home can attract more buyers but comes with a cost.

  • Capital Gain Tax (CGT): You generally won’t pay CGT on capital gains from selling your primary place of residence(PPOR), but you will if you sell your investment property.

  • Pest and building inspections: Before selling, it's common for sellers to arrange pest and building inspections to identify any issues that may need addressing.

  • Legal fees: Sellers will also need to pay for any legal advice or services required throughout the selling process.

  • Settlement adjustment costs: These costs include rates and taxes that need to be adjusted between the buyer and seller at the time of settlement.

  • Moving costs: Finally, sellers should budget for the costs associated with moving out of their property, including packing, removalist services, and cleaning.

These are the key costs involved in selling a house, and sellers should consider them carefully when planning to sell their property.

How much do I have to pay capital gain tax (CGT) after selling my investment property and is it worth paying?

When you sell an investment property in Australia, you may be liable to pay capital gains tax (CGT). The amount of CGT you need to pay is calculated based on the difference between the sale price of the property and its original purchase price, known as the capital gain. This capital gain is then added to your assessable income for the financial year in which the property was sold.

The rate of CGT you will pay depends on various factors, including your individual tax rate, how long you have owned the property (to determine if you are eligible for any CGT discounts), and whether the property was your main residence at any time.

It is recommended to consult with a tax professional or financial advisor to accurately determine the amount of CGT you will need to pay after selling your investment property. They can help you assess if the potential benefits of selling the property outweigh the CGT liability, based on your financial circumstances and investment goals.

Should I sell my house?

or

Use the equity to build a property portfolio?

It's crucial to carefully evaluate different aspects before making the decision to sell your investment property or leverage the equity to acquire an additional one.

Proper consideration of these factors is paramount in determining the most suitable course of action based on your financial goals and circumstances.

  • Consider the current market conditions and property trends to determine if selling would yield a favourable return on investment.

  • Evaluate the potential returns and risks associated with selling your current investment property versus purchasing another one.

  • Analyze the cash flow from your current property and compare it to the expected cash flow from a new investment.

  • Consider the rental potential, location, and growth prospects of the new property before making a decision.

  • Consult with a financial advisor or property investment expert to gain insights into your specific situation.

  • Assess your long-term financial goals, risk tolerance and how selling or leveraging the equity may align with these objectives and chosen strategy.

  • Review the tax implications of selling versus leveraging the equity for a new purchase.

  • Factor in any financial constraints or limitations that may influence your decision.

  • Explore financing options available for a new investment property purchase and how they compare to selling your current property.

  • Consider the potential for diversification in your property portfolio by either selling or leveraging the equity for a new purchase.

Disclaimer: The information provided in this content is intended for general informational purposes only and should not be considered as professional advice. While we strive to provide accurate and up-to-date information, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the content for any purpose. Any reliance you place on such information is therefore strictly at your own risk. It is essential to always seek the advice of a qualified professional for any real estate or investment decisions you may undertake based on the information provided.