NSW Am I thinking about this all wrong. 650K IP

Looking to buy my first IP and like many others are fixated around the 650k mark to get the stamp duty concession. This means I have to buy in NSW and preferably no more than a few hours out of syd since I’ll have to live there for 6 months. (I know what you’re thinking, not another one…)

Working at a financial institution I can get away with no LMI with LVR of 90% for most postcodes which is helpful as I would not be able to afford a deposit and stamp duty for a 650k IP.

I feel I am being blinded by the idea of potentially saving 20k stamp duty. I’m currently looking at Mudgee, orange, Cessnock (I know they have sky rocketed but the yields are quite attractive)

Can anyone please share another perspective or any advice? is it worth not looking outside NSW to save on stamp duty. I will not be able to afford a deposit and stamp duty if I were to buy somewhere else at 650K.

Any suburb recommendations? I would like to get something to hold onto for long term.

I’m 24, earning early 6 figures still living at home.

 

Regardless of where and what you buy, I'd never let any external element to a deal be the deciding factor to buy or not, be it stamp duty concessions, negative gearing etc

Buy something based on fundamentals. Supply and demand. Add value ability. Growth corridor. Ripple suburbs etc.

 

This. If you choose a house based on the ability to avoid stamp duty but you miss out on possible growth due to your choice. Then you’ve saved $20k on stamp duty but possibly triple or $100k+ on growth value. I’d think hard about what you really want out of an IP.

 

What is your medium term goal?

Are you trying to build equity, sell it and get a foothold in Sydney? If so you are going to have a lot of transaction costs.

Re stamp duty, as I understand it you will have to live in the place as your ppor for 6 months for the stamp duty concession in NSW. Can you really go and live in Orange for 6 months?

Unless I'm mistaken the stamp duty concession only applies if you live in the place for 6 months. Can you really move to orange/miudgee to save stamp duty?

Also, most people on this forum would say that Perth, Central and Northern Queensland have a lot less downside and more upside than regional areas that have alreadyb recently experienced 30% growth.

I know it can feel like you are missing out on the gravy train of NSW property growth but all factors are working against you at the moment. Id suggest you keep your powder dry.

 

You need to live there for 6 months. How is that going to affect your current job if you are several hours away? Also, will your parents just allow you to move back home after your 6 month hiatus?

Maybe listen to @Sackie and do more research and buy something based on good fundamentals, not just a small saving on Stamp Duty. You're young, and have a decent wage, which presumably will only go up. You have many things going for you, so you don't have to throw the baby out with the bathwater just to get a foothold in the property market at all costs.

 

You should be thinking long term. Like 100 years.

At your age and relatively high income, the limitation of buying a sub 650 property (and having to live in it) might end up to be a huge negative compared to if you buy something more expensive with land and hold it until you die.

 

Or.....you could get a house with decent land size in West/South West Sydney. Can commute into work.

 

Just buy the IP and dont spend an extra 200k for a non existent saving. I understand in NSW like Vic their is no Stamp duty if you build a new house, their is Stamp duty on the land. if you buy the land separately stamp duty is only about 4k. It is also added to your cost base anyway if it is an IP. Also with an IP you can get building allowance and depreciation benefits , perhaps higher income so more service ability. Investments should be based on returns.

 

He said he doesn't have the cash to pay stamp duty and deposits o straight IP play not really possible

 

How hard would it be to save enough to pay stamp duty while on 'early 6 figures' and living at home? If they can afford to make payments in 600k of loans with no rent coming in and nothing deductible?

 

There is still a stamp duty concession up until 800k. I would recommend looking for sub 800k as there are many options in this range that might better fit your situation

 

Thanks a lot everyone, really helped me.
Thinking about it now it does seem unreasonable to base such a decision of a concession and let it be a decision making factor.
To be clear, I work remotely and would have no issue moving away for 6 months and coming back home. If anything it might even be a bit relaxing outside the city.
Anyways, if I find something I believe is good and if it happens to get concession then great otherwise I will prioritise finding the best property for me my needs and not rely on gov as you're right, it does seem a bit risky with their constant change of policies.
Thanks a lot again everyone!

 

What would you recommend I look at? Haven't been looking at much in that price range