The purchase price is one number. The cash you need to get to closing is another. Here is a practical starting budget using a $300,000 purchase.
Start with a $45,000 planning target
For this example, set aside 5.5% of the purchase price for legal fees plus VAT, 5% for a down payment, 3% for the purchaser’s share of VAT on conveyance and 1.5% for miscellaneous expenses. All amounts are calculated on $300,000.
- Legal fees plus VAT · 5.5%: $16,500
- Down payment · 5%: $15,000
- VAT on Conveyance · purchaser’s half of 6%: $9,000
- Miscellaneous allowance · 1.5%: $4,500
- Illustrative upfront total · 15%: $45,000
These are planning assumptions, not a legal-fee quote or a promise of 95% financing. The down payment is part of the purchase price. Under this illustration, the remaining purchase-price balance would be $285,000, subject to lender approval.
How VAT on Conveyance changes with the price
Our calculator uses the following planning schedule, with the purchaser paying half of the full conveyance VAT amount. The applicable rate is applied to the entire purchase price, rather than progressively to portions of the price.
- Below $100,000: full rate 2.5%; purchaser’s share 1.25%.
- $100,000 to below $300,000: full rate 4%; purchaser’s share 2%.
- $300,000 to below $500,000: full rate 6%; purchaser’s share 3%.
- $500,000 to below $700,000: full rate 8%; purchaser’s share 4%.
- $700,000 and above: full rate 10%; purchaser’s share 5%.
For a $300,000 purchase, the full conveyance VAT amount is $18,000 and the purchaser’s half is $9,000. Confirm the applicable rate, any relief and how the tax is shared in your transaction with your attorney.
With Matt’s legal discount
Using the calculator’s discounted legal-fee estimate of 3.2% ($9,600), the same example totals $38,100: $9,600 in legal fees plus VAT, a $15,000 down payment, $9,000 in conveyance VAT and $4,500 in miscellaneous expenses. That is an estimated $6,900 saving compared with the standard 5.5% legal-fee allowance. Discount availability and terms must be confirmed.
What could change that figure?
This $45,000 estimate includes legal fees plus VAT and the purchaser’s half of conveyance VAT as separate items. Ask your attorney for an itemised closing estimate confirming those charges, any applicable VAT on the mortgage and disbursements. Avoid counting a charge twice if it is already included in your quote. Ask your lender about valuation, insurance and any arrangement costs; the miscellaneous allowance may not cover them all.
First-time buyers should check whether they qualify for relief before assuming a tax saving. The Department of Inland Revenue provides a first-home exemption application process. Eligibility and approval need to be confirmed for your purchase.
Build your own cash-to-close plan
Keep moving, repairs and an emergency reserve separate from your closing funds. Confirm when each payment is due and whether a contract deposit will count toward your down payment, so you do not accidentally count the same money twice.
My next step would be to get you started with prequalification, then match the search to your approved budget and the cash you are comfortable using. Replace every estimate with a written figure before committing.
