Queensland investment property costs – what you need to know

Owning an investment property in Brisbane or the Sunshine Coast can be a great way to build long term wealth, but it’s essential to understand the full spectrum of costs involved.

Whether you’re a first-time investor or looking to expand your property portfolio, being aware of the ongoing and one-time expenses is crucial to managing your investment effectively.

In this blog, we’ll break down the key costs of owning an investment property in Queensland to help you make informed decisions and maximise your returns.

1. Sunshine Coast investment property – initial purchase costs

When buying a Sunshine Coast investment property or Brisbane investment property, the initial purchase costs are often the most significant. These include:

Transfer Duty (Stamp Duty). Transfer duty is a fee imposed by the government when a property is transferred from one owner to another. It is payable on all property purchase transactions in Queensland.

Three significant factors primarily determine transfer duty:

• the value of the property
• whether it’s your own home or an investment
• eligibility for any concessions or exemptions

For example on a $900,000 investment property (if you are an Australian resident), as of today the approximate stamp duty payable would be: approximately $33,525.

Legal and conveyancing fees: You’ll need a solicitor or conveyancer to handle the legal aspects of the property transfer. These services typically cost between $1,000 and $2,000, depending on the complexity of the transaction.

Building and pest inspection fees: Before finalising your purchase, it’s recommended to conduct building and pest inspections to identify any potential issues with the property. These typically cost between $400 and $800.

Mortgage application fees: If you’re borrowing to purchase the property, the bank or lender may charge fees for processing your mortgage application. These can range from $500 to $1,000.

2. Sunshine Coast investment property – ongoing property costs

Once the property is in your hands, the ongoing costs of maintaining and managing your investment begin. These can include:

Mortgage repayments: This is often the largest ongoing expense for investors. The amount will vary depending on the size of your loan, the interest rate, and the repayment terms. It’s essential to factor this into your budgeting to ensure the property remains financially viable.

Council rates: In Queensland, local councils charge rates based on the value of your property (unimproved capital value) and its location. These rates can range widely depending on the value of your property. 

Land tax: In Queensland you may be liable for land tax in QLD, depending on the land value of your investment property. Land tax is only applicable to properties valued above a certain threshold, further details can be found here.

Insurance: You’ll need to protect your property with insurance, including building insurance, contents insurance (if applicable), and landlord insurance. Costs vary largely according to the property’s location, size, and value.

Property management fees: If you engage a property manager to handle tenant inquiries, rent collection, and maintenance requests, expect to pay management fees. These generally range from 7% to 10% of the weekly rent, depending on the property manager’s service level, location and type of property.

3. Maintenance and repairs

Keeping your Sunshine Coast investment property or Brisbane investment property in good condition is essential for maintaining its value and attracting tenants. Regular maintenance may include:

Repairs: From fixing plumbing issues to addressing electrical problems, ongoing repairs are a reality of property ownership. Setting aside a contingency fund for repairs is advisable, typically around 1-2% of the property’s value per year.

Routine maintenance: This includes aspects such as lawn care, cleaning gutters, and servicing air conditioning systems. These costs can vary based on the size of the property.

4. Tax implications for your Sunshine Coast investment property 

Owning an investment property also comes with tax implications and only an accountant is qualified to provide advice for your circumstances.

In general terms, while property investors can claim various expenses as tax deductions, including interest on your mortgage, property management fees, and maintenance costs, it’s important to also consider the following:

Capital Gains Tax (CGT): If you sell your investment property for a profit, you may be liable for CGT. However, if the property was held for more than 12 months, you may be eligible for a 50% discount on the taxable gain.

Depreciation: You may be able to claim depreciation on the building and certain assets within the property, such as appliances and furniture. A quantity surveyor can assist in identifying eligible depreciation deductions.

5. Vacancy costs

One of the often overlooked costs of owning an investment property is the possibility of periods when your property is vacant. While you may not always have tenants lined up, it’s important to plan for potential gaps in rental income. Setting aside funds for such occasions will help keep your investment financially stable.

Owning an investment property in Queensland involves several costs that need to be accounted for, both upfront and on an ongoing basis. While the potential for capital growth and rental income can make property investment a rewarding endeavor, understanding the full scope of costs will help you plan and manage your investment more effectively.

By factoring in everything from purchase costs and mortgage repayments to maintenance and taxes, you can ensure your investment remains profitable and sustainable over the long term.

Always remember to consult with professionals, including accredited property investment advisers, financial planners, accountants, and property managers, to navigate the complexities of property ownership and maximise your returns.

If you are looking for advice on purchasing an investment property on the Sunshine Coast or in Brisbane, please reach out to us as we would love to assist.