Login
iscover
The state budget gives first home buyers the chance to avoid upfront stamp duty.
Newsletter
NSW property tax reform to cost $729m
22 June 2022
•
10 minute read
The NSW budget has delivered on property tax reform with the goal of helping first home buyers get into the market.
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The state government will allow first home buyers to choose between paying stamp duty upfront or a smaller annual property tax payment of $400 plus 0.3 per cent of the land value.
The option will be available on homes valued less than $1.5 million and is forecast to cost the government up to $729 million over the next four years.
Premier Dominic Perrottet said the program would make it easier for people to enter the housing market.
“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” said Mr Perrottet.
“In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent.”
The tax partner at BDO, Fady Abi Abdallah, welcomed the push towards stamp duty reform.
“This is the first step in a long journey to helping first home buyers enter the property market and achieve duty reform in NSW,” said Mr Abi Abdallah.
“Hopefully this is the first step towards modernising the state tax regime in NSW.
“Stamp duty was introduced to NSW in 1865 and it’s showing its age as an outdated tax which has stifled the property market in the last few decades.”
In late 2021 Mr Perrottet outlined his views on stamp duty at a budget estimates hearing.
“Stamp duty continues to grow and be an impediment to getting into the property [market],” he said.
“I believe that an annual amount that is paid is better than a substantive upfront figure.
“It’s the biggest impediment not just to first-home buyers getting into the property market, but also transferring their property.”
With stamp duties injecting almost $1 billion into the NSW government accounts every month, Mr Perrottet said ditching it completely would require support from the federal government.
“States can’t embrace structural reform on their own, we need greater collaboration with the federal government,” he said.
Treasurer Matt Kean said that the new scheme would make the market more accessible to first home buyers and help with housing security.
“We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them,” said Mr Kean.
“Housing security is not only the bedrock of economic security but also the foundation to a good life as well.”
The NSW government believes that opting to pay a property tax rather than stamp duty upfront could enable first home buyers to buy a home almost two years earlier.
The ACT is the only other state with a property tax instead of stamp duty. When a buyer opts for property tax instead of stamp duty, the property is permanently removed from the stamp duty system for future sales.
The NSW system allows buyers to choose stamp duty or property tax each time the home is sold.
The government aims to have the program running by 16 January 2023.
You need to be a member to post comments. Become a member for free today!
