Property glossary: Common terms used in real estate in Australia

Buying a property is one of the biggest purchases you’ll make in your lifetime.

After finally saving up that deposit you start your search, only to be bombarded by agents speaking real estate jargon.

Understanding the lingo of the industry can help make the process less overwhelming.

Here are some of the most common terms you’re likely to encounter during your property search.

Auction

An auction is the public sale of a property to the highest bidder. A licensed auctioneer offers the property for sale at a starting price and takes increasing offers from registered bidders.

Body corporate

A body corporate is a group of owners who share property on a piece of land and manage common-use areas like driveways, gardens, pools and lifts.

Bond

A bond is a security deposit, usually the equivalent of four weeks’ rent, that a tenant pays to a landlord. It acts as an assurance that the tenant, upon vacating, will leave the property in good condition.

Capital gains tax (CGT)

Capital gains tax is the tax you need to pay when you make a profit from the sale of an asset, such as property or shares. You report your capital gains and losses on your tax return, so CGT is part of your income tax rather than a separate tax.

Capital value

The capital value is the amount a property would be expected to realise when sold in ordinary circumstances.

Equity

Equity is the value a property accrues over time which is above the debt the owner owes on their mortgage.

Homeowner

A homeowner is the person who legally owns the dwelling they live in, such as a house or apartment.

Investment property

An investment property is a property that is purchased as an investment, and often rented out to tenants. It is not the property owner’s primary residence.

Landlord

A landlord is the owner of a property being rented or leased out, also known as the lessor.

Land tax

Land tax is the annual tax charged on land owned above a certain value which is levied by a state or territory government. The rate depends on the total value of taxable land according to the local council.

Lease

The lease is a legally binding contract, also known as a rental or tenancy agreement, between a landlord and a tenant. This is usually for a set period of time in exchange for regular rental payments under certain conditions.

Mortgage

A mortgage is a loan where the real estate purchased is used as security, or collateral, to the lender.

Negative gearing

When the expenses of owning an investment property are greater than the rental earnings, this is what’s called negative gearing. This can be used to reduce tax liability.

Owners’ corporation manager

An owners’ corporation manager is someone who helps lot owners with the financial, administrative and maintenance requirements of their development. There are a range of qualities to look for in an owners’ corporation manager.

Real estate trust account

A real estate trust account is an account held by an authorised financial institution into which an estate agent deposits money from a client. The money may include sales deposits, rent or fees for advertising or maintenance.

Real Estate Investment Trust (REIT)

A Real Estate Investment Trust (REIT) is a business trust or corporation that is publicly traded and manages a portfolio of real estate investments for shareholders. In Australia, REITs are generally referred to as A-REITs and typically invest in commercial properties.

Settlement date

A settlement date is the day when ownership of a property is legally transferred from the seller to the buyer. Put simply, it’s when a buyer gets the keys to their property.

Stamp duty

Stamp duty is a one-off government tax levied on most real estate purchases. This tax is paid on homes, investment properties, holiday homes, primary production land and sometimes even business transfers. There are some exemptions and concessions for stamp duty.

Subdivision

When a block of land is divided and each of the subdivided blocks falls under a separate title, it is referred to as subdivision. A person may be subject to capital gains tax (CGT) when they sell subdivided blocks.

Tenant

A tenant is the person or people living in a property in agreement with the owner through a lease.

Speak to the property experts

Are you considering a property purchase? Do you want to know more about the best way to manage an investment property? Whatever your property-related question, LDB Group has experts in property investment and tax.

To find out how we can help, call us on (03) 9875 2900 or fill in the form below.