Buying solo: Is the ‘single tax’ real and how can you overcome it?

Buying a home on your own can feel like you’re playing the property game on hard mode.

One income. One deposit to save. One person covering the bills. Meanwhile, couples may have two incomes and two sets of savings to bring to the table.

It’s sometimes referred to as the “single tax” — the idea that everyday life can cost more when there’s only one person paying the bills.

But is there really a single tax when it comes to buying property? And, more importantly, what can solo buyers do to help get themselves into the market?

Let’s break it down.

First things first — is the ‘single tax’ actually real?

There’s no official “single tax” charged to people buying property alone.

Instead, the term describes the financial reality that many costs don’t necessarily halve just because there’s only one person paying them.

A couple purchasing together may have two incomes contributing towards a deposit and home loan repayments. They can also share costs such as utilities, council rates, insurance and maintenance.

When you’re buying solo, those costs generally need to be managed using your income and savings alone.

That can affect how quickly you’re able to save a deposit, how much you may be able to borrow and the price range you can comfortably consider.

But buying solo certainly doesn’t mean buying a home is off the table.

It may simply require a different strategy.

Know your numbers before you start searching

It’s easy to start your property journey by scrolling through listings and deciding where you’d like to live.

For a solo buyer, understanding the numbers first can be particularly valuable.

A lending specialist can help you get an idea of your potential borrowing capacity based on factors such as your income, expenses, deposit, debts and other financial commitments.

Just as importantly, think about what you would feel comfortable repaying.

The maximum amount a lender may be prepared to lend isn’t necessarily the amount you need to borrow.

Leaving some breathing room in your budget can help you manage the other costs of home ownership and unexpected expenses along the way.

Build your deposit with a clear target

Saving a deposit on one income can take time, so having a clear goal can make the process feel more achievable.

Start by understanding roughly how much you may need and what other upfront purchasing costs could apply.

Then work backwards.

Consider setting up a dedicated savings account and automating a regular transfer each payday. You might also review recurring expenses, subscriptions and discretionary spending to identify areas where you can redirect money towards your property goal.

It doesn’t mean putting your entire life on hold.

A realistic savings plan you’re able to stick with can be far more useful than an overly ambitious one that leaves no room to enjoy yourself.

Find out whether you could access a government home buyer scheme

If you’re buying solo, don’t assume you need to save a traditional 20% deposit before exploring your options.

Depending on your circumstances, you may be eligible for an Australian Government home buyer scheme or state or territory-based assistance.

Eligibility criteria, property price caps and other conditions can apply and may change over time, so it’s important to check what’s currently available and whether you qualify.

A lending specialist can help you understand which options may be worth exploring as part of your home buying strategy.

Think differently about your first property

Your first home doesn’t necessarily need to be your forever home.

If the house you pictured buying is outside your budget on a single income, consider what you’re prepared to compromise on — and what you’re not.

That could mean looking at:

• A smaller property
• An apartment, unit or townhouse instead of a house
• A neighbouring suburb
• A property further from the CBD
• An older property rather than a new build
• A home you could improve over time

Think about the things that genuinely matter to you, such as commute, lifestyle, family, transport or outdoor space, and separate those from the things that would simply be nice to have.

Changing the property doesn’t mean abandoning the goal.

Could rentvesting be another option?

Buying a property doesn’t necessarily mean you have to live in it.

If purchasing in the area where you currently live is beyond your budget, you could consider rentvesting — continuing to rent where you want to live while purchasing an investment property somewhere that better suits your budget and investment goals.

This won’t be the right strategy for everyone. You’ll need to consider your rent, investment loan repayments, rental income, property expenses, tax implications and overall cash flow.

But for some solo buyers, it may provide another pathway into property ownership.

Consider whether buying with someone else could work

Buying solo doesn’t have to mean your only options are buying completely alone or waiting until you’re in a relationship.

Some buyers consider purchasing with a sibling, family member or friend.

Pooling deposits and incomes may increase your purchasing options, but co-ownership comes with important financial and legal considerations.

You’ll need to agree on issues such as ownership shares, expenses, repayments and what happens if one person wants to sell or their circumstances change.

Independent legal advice is important before entering into this type of arrangement.

Look closely at your existing debts

Your income isn’t the only thing a lender considers when assessing how much you may be able to borrow.

Existing financial commitments can also matter.

Credit cards, personal loans, car loans and Buy Now Pay Later facilities may affect your borrowing position, even when some facilities aren’t being heavily used.

Before applying for a home loan, it can be worthwhile reviewing your existing debts and credit facilities.

That doesn’t mean automatically closing accounts or making major financial changes before seeking advice. Talk to your lending specialist about your overall position and what may be appropriate for your circumstances.

Budget for owning, not just buying

Getting the deposit together is one milestone. Being able to comfortably own the property is another.

Your budget should consider more than your home loan repayment.

Depending on the property, you may also need to allow for expenses such as:

• Council rates
• Owners corporation or strata fees
• Home and contents insurance
• Utilities
• Maintenance and repairs
• Moving costs
• An emergency savings buffer

Understanding these costs before you buy can help you set a more realistic property budget.

Don’t compare your property journey with someone else’s

It can be difficult watching friends or couples purchase properties that feel out of reach when you’re doing it alone.

But your property journey doesn’t need to look like theirs.

You might buy a smaller home. You might purchase in a different suburb. You might take longer to save your deposit or choose rentvesting as your first step into property.

None of those approaches changes the fact that you’re working towards property ownership on terms that suit your circumstances.

The goal isn’t to keep up with someone else’s property journey.

It’s to find a pathway that works for yours.

So, can you overcome the ‘single tax’?

You can’t create a second income out of thin air — and there’s no getting around the reality that buying on one income can present different challenges.

But there are ways to approach those challenges strategically.

Understanding your borrowing position, setting a realistic deposit target, exploring available home buyer support, reconsidering what your first property needs to look like and getting the right advice can all help you understand your options.

Most importantly, don’t rule yourself out before you’ve looked at the numbers.

Thinking about buying solo?

You don’t need to work it all out on your own.

An LJ Hooker Home Loans lending specialist can help you understand your borrowing position, explore suitable home loan options and talk through different pathways that could help you work towards buying your own property.

Whether you’re ready to buy now or you’re still working towards your deposit, having a plan can give you a clearer idea of what your next step could be.

Ready to find out what buying solo could look like for you?

Speak with your local LJ Hooker Home Loans lending specialist.

Home Loans Made Simple.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. Eligibility criteria, lending criteria, fees and charges may apply. You should consider seeking independent financial, taxation and legal advice appropriate to your circumstances.