NSW home buyers could be spared from paying stamp duty on new homes under a new government plan.
State Treasurer Dominic Perrottet wants to phase out stamp duty and replace it with a new tax to boost the NSW economy. His proposal would see buyers have a choice between the status quo of paying stamp duty or an annual tax on land value.
Stamp duty is a tax the government charges every time someone buys a new property. First-time buyers already benefit from an exemption if the home they’re buying costs less than $800,000.
Instead of being exempt from property taxes, first homebuyers would instead receive a grant worth up to $25,000 under the proposed overhaul.
The changes would only apply to future purchases, meaning if you are not buying a property there is no change.
Mr Perrottet said stamp duty was “one of the biggest financial barriers to home ownership” in NSW and an overhaul would incentivise home ownership.
“This is a reform proposal for NSW where more people can own their home and have more freedom to choose the right property for their family at every stage of life,” he said.
“This is a vision for every person and family in NSW – from first home buyers trying to get a foot on the property ladder, to frontline workers moving to service our regional communities, and retirees who are ready to downsize.”
According to the NSW Treasury, an owner occupier would be potentially slugged $500 per year + 0.3 per cent of unimproved land value, while investors would be taxed $1500 annually and 1 per cent of unimproved land value.
Adrian William director Adrian Tsavalas said removing stamp duty would stimulate the property market and improve house prices.
“Along with low interest rates, this will propel the property market and also increase stock levels by removing the burden of stamp duty that keeps many from selling,” he said. “If buyers don’t have to spend that sort of money on an upfront tax, it could also free them up to spend more on a property.”
Upside CEO Adam Rigby said while the changes will greatly improve the market and the ability to buy and sell, it could still make sense to pay stamp duty upfront.
“If you plan to stay in your house for a long time, it will make sense to pay stamp duty instead of an annual tax as that way you won’t be subjected to any future hikes the government introduces at a later date,” he said.
Stamp duty collection has traditionally been one of the state’s biggest revenue sources, earning NSW $7.4 billion in the last financial year. But Mr Perrottet said scrapping stamp duty could end up earning the state more money to the tune of $11 billion in the first four years alone.
The government will consult with the public before deciding on whether to make the change or not.