Whether you are buying or selling a home, the transaction will come with certain cost implications. When planning their finances around the purchase or sale of a property, buyers and sellers often overlook some items and forget to include them in their budget, says Debbie Justus-Ferns, divisional manager of Renprop Residential Sales.
“Expenses such as agent commission, transfer fees, compliance certificates, rates clearance costs and the actual cost of moving are some of the big ticket and obvious expenses that buyers and sellers make sure they outline in their budgets. But there are other costs, some more obvious than others that are often overlooked when working out expenses,” says Justus-Ferns.
She outlines some of the commonly overlooked costs as follows:
Capital gains tax (if applicable): Capital Gains Tax will be payable if a profit was made on the sale of the property should the property not be the primary residence of the owners, or if it is registered under a company or trust and not an individual. The tax implications for the seller must be confirmed and calculated by their accountant before the property is sold.
Bond cancellation fees: If the financial institution that holds the bond over the property that is sold is not given 90 days written notice of the seller’s intent to sell and written instruction to cancel the bond on the transfer of the property, the seller may be liable for a cancellation fee, which varies from bank to bank. The financial institution that holds the bond may also charge penalty interest on the outstanding amount in some circumstances.
Sellers are liable for all compliance certificates namely: electrical compliance as well as a gas compliance and electric fence compliance certificates if required.
Conveyancing fees: These are the fees charged by the attorney for transferring and registering the property into the buyer’s name. These fees are usually a percentage of the purchase price or value of the property.
Home loan initiation fee: This is a fee charged by the bank to open up a home loan account on behalf of the buyer. Banks are allowed to charge up to a maximum of R5 985 for this service.
Bond Registration costs: This fee is payable to the bond attorneys who are registering a bond in favour of the buyer over the property.
Justus-Ferns concludes by saying that both buyers and sellers should thoroughly research the costs involved with buying or selling a property to ensure they don’t end up with any nasty financial surprises at the end. “Your bond originator and/or estate agent should be able to assist buyers and sellers with information regarding the costs that they would need to incorporate into their budgets.”