Dominic Perrottet to finally axe stamp duty in NSW Budget for Australian home buyers
NSW’s first home buyers will no longer have to pay thousands of dollars in stamp duty under a plan to be unveiled in the current state budget.
Prime Minister Dominic Perrottet abolishes the hated tax paid to the state government by a home buyer.
Instead of paying the stamp duty upfront, first-time homebuyers could choose to pay an annual land tax to the state government in lieu of real estate worth up to $1.5 million.
If buyers decide not to pay stamp duty, they will pay $400 plus 0.3 percent of the land value per year.
Mr Perrottet last year, when he was treasurer, marked the ambitious plan to replace stamp duty with an annual land tax.
Home buyers in NSW would no longer have to pay thousands of dollars in stamp duty under a plan to be unveiled in today’s next state budget. Pictured: Bondi Beach
Instead of paying the stamp duty upfront, buyers could choose to pay an annual land tax to the state government instead. Pictured: A house auction in Sydney
The state government has allocated $728 million in the current state budget over the next four years as part of its housing affordability package to cover the shortfall in revenue.
“It will mean that more NSW residents will move into their first homes at a younger age and realize the great Australian dream of home ownership,” said NSW Treasurer Matt Kean.
The average average stamp duty in Sydney is $49,934.
What is stamp duty?
Stamp duty is a tax paid by the buyer to the state government when purchasing a home
The figure depends on the value of the house, but the average average stamp duty in Sydney is $49,934
First-time homebuyers may qualify for stamp duty exemption for homes they purchase for less than $650,000, while a concessional rate is available for properties up to $800,000
The rule applies whether the house is brand new or existing
Ken Morrison, chief executive of The Property Council of Australia, described the stamp duty tax as “the worst in Australia” because it “disrupts behaviour, paralyzes job creation, slows growth and traps people in homes that may not be suitable for their needs. †
Prime Minister Perrottet, who has called stamp duty an “inherently appalling tax,” abolished it completely when he was treasurer.
He wanted 80 percent of homes in the state to have the ability to pay an annual land tax, and buyers would be eligible whether or not they bought their first home.
He admitted, however, that such a large-scale reform could not be achieved without the help of the Commonwealth
“It’s a huge barrier for people to get into the housing market,” Perrottet told reporters.
“But the reality is that state governments cannot abolish stamp duty without the support of the federal government.
“This is a time for the federal and state governments to work together to unlock opportunities and economic opportunities for people in the future.”
The NSW government gets 32 percent of its revenue from stamp duties, which were worth $12.2 billion in the 10 months to April 2022, according to Revenue NSW.
This is up from 18.3 percent 10 years ago when house prices skyrocketed.
NSW Treasury predicted that switching to a land tax would bring about 20 percent less revenue than the current system.
Labor opposes the move to a land tax, with state elections imminent in March.
In fiscal year 2020-2021, $9.6 billion in stamp duty was collected.
Even as housing prices have declined in recent weeks and even dropped in some suburbs, the state government will likely have withdrawn $14 billion in stamp duty by the end of fiscal year 2021-2022 on June 30.
Monthly stamp duty revenue rose during the Covid pandemic from a low of $450 million in May 2020 to a high of $1.6 billion in October and December 2021.
The figure fell to $976 million in April as home prices stabilized or fell.
Prime Minister Perrottet, who has called stamp duty an ‘inherently appalling tax’, floated it when he was treasurer but then withdrew, saying he needed federal government support
The average average stamp duty in Sydney is $49,934. Pictured is an auction in Hurlstone Park in Sydney’s west