- First-time home buyers in New South Wales will soon have the option of paying annual property tax instead of stamp duty.
- First-time home buyers who purchase property up to $1.5 million or vacant land up to $800,000 will be eligible.
- The prime minister says the reform will allow buyers to save more and enter the property market earlier.
So what is the reform, who does it apply to, and will widespread adoption really help first-time homebuyers?
How will the scheme work?
To qualify, it must be the buyers’ first home and cost up to $1.5 million, or $800,000 for a vacant block of land.
New South Wales Premier Dominic Perrottet said the reform will allow buyers to “cut years off” the time it takes to secure a security deposit. Source: AAP / BIANCA DE MARCHI
Buyers could access the program by Saturday if Governor Margaret Beazley approves before then.
According to Treasury assumptions, the break-even period between the initial stamp duty and the annual property costs would be 36 years for an $800,000 apartment, 28 years for a $1 million townhouse, and 26 years for a $1.25 million home.
What was the reaction?
The party called the legislation a “Trojan horse” to introduce a broad-based property tax on families, which will rise steadily over time.
“It seems like an incredible waste of time and money, as well as huge uncertainty for first-time home buyers, if we allow this bill to come into effect now, to be reversed. if Labor wins the next election,” Ms Boyd told AAP.
“It is true that avoiding stamp duty will reduce the time it takes a typical buyer to save a 20% down payment by about two years. But the increased purchasing power of buyers will also slightly increase real estate prices,” he said.
“Instead of a bipartisan approach to major economic reform, we find ourselves in the worst of worlds, with an opposition pledging to oppose a policy the government hasn’t even pledged to adopt. .”
What is the situation in other states?
Each jurisdiction has its own version of stamp duty, with rates and systems varying across the country.
- Queensland: In Queensland, stamp duty rates increase with the value of the property. The top rate for properties over $1 million is $38,025 plus $5.75 for every $100, or part of $100, over $1 million.
- Victoria: For Victorian buyers, stamp duty rates start at 1.4% of the assessed value of properties under $25,000 and go up to $110,000 plus 6.5% of the assessed value over $2 million of dollars. First-time home buyers — as well as buyers in certain areas — may be eligible for a duty waiver or concession.
- LAW: In the ACT, the transfer tax starts at $0.60 per $100 or part thereof up to $260,000. The highest rate in the territory is a flat rate of $4.54 per $100 applied to the total transaction value for properties over $1.455 million. Certain concessions and exemptions are subject to availability.
- Tasmania: Property transfer tax rates vary, with the highest rates (for properties over $725,000) reaching $27,810 plus $4.50 for every $100, or part, by which the assessed value exceeds $725,000. Eligible first-time home buyers of established homes may be eligible for a 50% concession.
- South Australia: In South Australia, stamp duty rates start at $1.00 for every $100 or part of $100 for properties $12,000 and under. The highest rate is applied to properties over $400,000 and is $21,330 plus $5.50 for each $100 or part of $100 over $500,000.
- Western Australia: For properties under $120,000, buyers will pay an assessment transfer tax of $1.90 per $100 or part thereof. The rate increases gradually, with the higher rate applying to properties over $725,000 at $28,453 + $5.15 per $100 or part thereof above $725,000.
- North territory: In the Top End, stamp duty is calculated based on price brackets, with a formula applied for properties up to $525,000. For properties over $500,000, buyers pay a fixed percentage of the property’s value. There are discounts and concessions available for first time owners, seniors, retirees and caregivers, as well as a primary residence discount.