The true cost of buying property in Australia
Australia’s property market is one of the most active in the world, but transaction costs are also among the highest. Transfer duty (commonly called stamp duty) is the big-ticket item — a progressive tax that can add tens of thousands of dollars to your purchase. On top of that, conveyancing fees, inspections, and various registration charges round out the upfront costs.
Ongoing expenses like council rates, water rates, landlord insurance, and strata levies (for apartments) eat into rental yields year after year. And if you’re a foreign buyer, an additional 9% surcharge on transfer duty makes the entry cost substantially steeper. Getting the full cost picture right before you invest is not optional — it’s essential.
Transfer duty (NSW)
Transfer duty in New South Wales is calculated on a progressive sliding scale, with rates increasing through a series of brackets as the property price rises. Like income tax brackets, you only pay the higher rate on the portion that falls within each band.
For a typical investment property in the $600,000–$1,000,000 range, transfer duty in NSW is a significant cost — often $20,000–$40,000 or more.
Foreign buyer surcharge: +9% — non-Australian buyers pay an additional 9% surcharge on top of the standard transfer duty rates. On a $750,000 property, this surcharge alone adds $67,500 to the transaction cost. It’s one of the highest foreign buyer surcharges in the world and is a critical factor for overseas investors to model.
Note that transfer duty rates vary by state. Our calculator uses NSW rates — other states like Victoria, Queensland, and Western Australia have their own bracket structures.
Closing costs
The conveyancing process in NSW involves a mix of professional fees, inspections, and government charges:
- Conveyancer/Solicitor Fees — handles the legal transfer of ownership, including contract review, title searches, and settlement. Fees vary by complexity.
- Building & Pest Inspection — a professional assessment of the property’s structural condition and any pest issues (particularly termites, which are common in many parts of Australia).
- Title Search Fee — the fee for searching the title at NSW Land Registry Services to confirm ownership details and any encumbrances.
- Registration of Transfer — the government fee for registering the new ownership with the Land Registry.
If you have a mortgage, add:
- Mortgage Registration Fee — the fee for registering the mortgage with the Land Registry.
- Mortgage Application/Establishment Fee — the lender’s fee for setting up the loan, which can vary significantly between banks and products.
For apartments/units:
- Strata Report — a review of the strata corporation’s finances, minutes, and any planned works. Essential for understanding the financial health of the building and upcoming special levies.
Total closing costs (excluding transfer duty) typically run A$2,000–A$5,000, which is relatively modest compared to the transfer duty itself.
Ongoing costs
Owning rental property in NSW comes with these recurring expenses:
- Council Rates (~A$2,000/year) — charged by the local council for services like waste collection, road maintenance, and community facilities. Varies by council area and property value.
- Water Rates (~A$1,200/year) — a fixed service charge plus usage-based charges. Landlords typically pay the fixed component, with tenants paying for water usage.
- Landlord Insurance (~A$1,500/year) — covers the building, landlord liability, and loss of rent. More comprehensive than standard home insurance and designed specifically for investment properties.
- Maintenance (~A$2,000/year) — routine repairs, painting, appliance replacements, and general upkeep. Older properties will generally cost more.
For apartments and units, add:
- Strata Levies (~A$4,500/year) — quarterly contributions to the owners corporation covering building insurance, common area maintenance, building management, and a capital works fund. Levies vary enormously — a basic walk-up might be A$2,000/year, while a building with a pool, gym, and concierge can exceed A$10,000/year.
Strata levies are often the largest ongoing cost for apartment investors and can make a significant dent in net yield. Always check the strata levy history and any upcoming special levies before purchasing.
Capital gains tax
Australia uses an income inclusion method for CGT. When you sell an investment property, the capital gain is added to your taxable income for the year and taxed at your marginal rate (0–45%).
The key concession is the 50% CGT discount: if you’ve held the property for more than 12 months, only 50% of the capital gain is included in your taxable income. This effectively halves the tax rate on long-held investments.
For example, if you sell for a $200,000 profit after holding for two years, only $100,000 is added to your taxable income. At a 37% marginal rate, you’d pay $37,000 — an effective CGT rate of 18.5% on the full gain.
If the property is your primary residence, the gain is fully exempt with no cap.
When selling, the agent commission is typically 2% of the sale price (plus GST at 10%), conveyancer fees for the sale run around A$1,500, and marketing and advertising costs average about A$7,500. If you have a mortgage, the discharge fee is approximately A$400.
What does this mean in practice?
Upfront transaction costs for a financed investment property in NSW typically run 5–8% of the purchase price, dominated by transfer duty. On an A$800,000 property, expect A$30,000–A$35,000 in transfer duty alone, plus another A$3,000–A$5,000 in closing costs. Foreign buyers face a dramatically higher entry cost due to the 9% surcharge.
Ongoing costs — particularly strata levies for apartments — can consume 25–40% of gross rental income. A property yielding 5% gross might only deliver 3–3.5% net after council rates, water rates, insurance, strata levies, and maintenance.
The 50% CGT discount is a meaningful advantage for long-term holders, but it’s important to model the actual tax impact at your marginal rate rather than assuming a blanket figure. Every investor’s situation is different.
Calculate your exact costs
Our free Australia property calculator handles all of these costs automatically. Enter your purchase price, financing details, and rental income to see your full cost breakdown, rental yields, and 10-year projection.
Try the Australia calculator →
For a detailed guide to each cost category, read the Australia buying guide.