Understanding Equity
Equity is the difference between your property's market value and what you owe the bank. This can grow over time through property value increases or by paying down your loan. Equity becomes a powerful tool for future purchases—especially if you understand how to use it strategically.

Stamp Duty and Land Tax
Known as transfer duty in some states, this is a government tax you pay when buying property. First home buyer concessions vary across Australia, and it's vital to understand how they apply to your situation. Some states, like the ACT, are transitioning to a system based on land tax, which is an ongoing ownership cost rather than a one-off.

Unimproved Land Value
This term refers to the value of the land without any buildings on it. It's used to calculate things like council rates and land tax. Importantly, it's not the same as market value—it can be significantly lower, depending on your area and property type.

Purchasing Costs
Beyond your deposit, there are numerous upfront costs including:
• Stamp duty
• Conveyancing/legal fees
• Building & pest inspections
• Strata reports
• Buyer's agent fees
• Mortgage setup fees

Planning for these costs is essential to avoid dipping below a 20% deposit and triggering LMI.

Offset Accounts vs Redraw
An offset account links to your home loan and reduces the interest you pay by offsetting the loan balance. It works like a transaction account—giving you flexibility while saving interest. A redraw facility, on the other hand, lets you access extra repayments but may be more restrictive. A good mortgage broker will help you choose the right option.

Loan Structure & Borrowing Entity
Getting your loan structure right from the start is critical. This includes choosing fixed or variable rates, who legally owns the property, and how you'll use equity down the track. Mistakes here can cost you thousands—especially if you need to make changes after settlement.

Leverage
Leverage refers to using borrowed money to invest. In property, it means you can buy a more valuable asset using your deposit as a base. This is what makes property a powerful wealth-building tool—but only when used responsibly.

Capital Growth vs Capital Gains
• Capital Growth is the increase in your property's value over time. It's why choosing the right property from the start is so important.

• Capital Gain is what you realise when you sell an investment. Subtract your purchase and selling costs from the sale price to find your taxable profit.

Capital Gains Tax (CGT)
CGT applies when you sell an investment property at a profit. Your principal residence is usually exempt, but if the property was rented out at any point or you made ATO claims (like a home office), part of it may be taxable. Always keep detailed records and get professional advice.

CGT Discount
Property held for more than 12 months is eligible for a 50% CGT discount in most cases. So if you made a $100,000 capital gain, you only pay tax on $50,000 at your marginal tax rate.

Negative Gearing
This tax strategy allows investors to deduct property losses (where expenses exceed income) from their taxable income. While popular when interest rates are high, it's less attractive in low-rate environments. It's also often misunderstood—especially when pitched by spruikers.

Depreciation
Depreciation refers to the wear and tear of a property's fixtures, fittings, and building structure. New builds or recent renovations can offer big deductions, but depreciation should never be the primary reason for buying. It doesn't replace the need for capital growth.

Why Real Estate Terms Matter
Knowing these terms isn't just about sounding smart—it helps you ask the right questions, spot red flags, and make better financial decisions. Whether you're speaking to a broker, a lawyer, or an agent, understanding the terminology empowers you to take control of your home-buying journey.

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