With property prices in the big cities skyrocketing, Tasmanian real estate is becoming increasingly popular with interstate investors.
However, buyers should be aware that there are some key differences in regulations and processes in the Apple Isle, compared to purchasing a home on the mainland.
It pays to be well across these small but significant nuances before you start browsing the property classifieds:
Cooling off period
Unlike South Australia, New South Wales and Queensland, there is no legislation in Tassie that provides for a mandatory cooling off period for homebuyers. Once you have signed the contract, there is no option to cancel it because you have changed your mind. The Real Estate Institute of Tasmania advises that interstate buyers should obtain legal advice before entering into a contract of sale for a property in Tasmania.
In other states, sellers must provide prospective buyers with a legal document called a vendor’s statement or disclosure statement, which must detail information pertaining to the property such as mortgages, covenants and easements, and council information such as zoning and rates. They must also declare if the property is in an area prone to bushfires.
Vendor’s statements are not required in Tasmania; instead it falls on the purchaser to undertake their due diligence in uncovering this information. For a mainland buyer, this may mean engaging the services of a buyer’s agent in Hobart to do the heavy-duty research on your behalf.
As in other states, the amount of stamp duty you pay is based on the value or purchase price of the property, whichever is greater. However, the scales differ greatly between states, so check out the Tasmanian State Revenue Office (SRO) calculator for a clear indication of what you’re up for.
Stamp duty must be paid within three months of the transaction, by lodging a cheque along with your contract of sale with the SRO, and there are penalties and interest payable if you fail to do this within the three-month timeframe. Unlike other states, Tasmania does not have any stamp duty exemptions in place for first homebuyers, although transfers of property between family members, such as in the case of divorce, may be exempt.
In order to preserve Tasmania’s unique flora and fauna, some properties have conservation covenants attached to the title. Conservation covenants transfer when a property is sold, becoming the legal obligation of the new owner.
These covenants restrict the use of the land and may prohibit certain activities that pose a risk to native habitats. If the property you purchase is subject to a conservation covenant, you can seek support from a Stewardship Officer with the Tasmanian Department of Primary Industries and Water. The good news is you’ll be exempt from any land taxes if your property is subject to a conservation covenant.
Grants for first-time buyers
Until 1 July 2017, first homebuyers of new homes in Tasmania are eligible for a $20,000 First Home Owner Grant (FHOG). After this date, the Grant amount will halve to $10,000.
The grant applies to owner-builders, house and land packages and homes bought off the plan, as well as the purchase of newly built homes, however you must satisfy eligibility criteria and the build must be complete within specified timeframes. The FHOG is not available to investors: to qualify, you must move into the property within 12 months of its completion, and occupy it for at least six months.
Land tax is generally not payable on a property that is your principal place of residence, however if you are building a new home, it may be applicable to vacant land until your build is complete. Contact the Tasmanian SRO for further information or to apply for the FHOG if you’re thinking of making the move to Hobart.
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