First homebuyers in NSW will no longer have to pay thousands of dollars in stamp duty under a plan to be unveiled in today’s state budget.
Premier Dominic Perrottet is phasing out the hated tax, which is paid to the state government by a buyer purchasing a home.
Instead of paying the stamp duty fee up front, first home buyers could chose to pay an annual land tax to the state government instead on properties worth up to $1.5 million.
If buyers decide to opt out of paying stamp duty, they will pay $400 plus 0.3 per cent of the land value per year.
Mr Perrottet flagged the ambitious plan to replace stamp duty with an annual land tax last year when he was treasurer.
Homebuyers in NSW would no longer have to pay thousands of dollars in stamp duty under a plan to be unveiled in next today’s state Budget. Pictured: Bondi Beach
Instead of paying the stamp duty fee up front buyers could chose to pay an annual land tax to the state government instead. Pictured: A home auction in Sydney
The state government has allocated $728 million in today’s state budget over the next four years, as part of its housing affordability package, to cover the shortfall of revenue.
‘It will mean more NSW residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership,’ NSW Treasurer Matt Kean said.
The median average stamp duty in Sydney is $49,934.
What is stamp duty?
Stamp duty is a tax paid to the state government by the buyer when purchasing a home
The figure depends on the value of the home but the median average stamp duty in Sydney is $49,934
First home buyers can qualify for a stamp duty exemption for homes they buy for less than $650,000 while a concessional rate is available for properties worth up to $800,000
The rule applies whether the home is brand new or existing
Ken Morrison, chief executive of The Property Council of Australia, described stamp duty tax as ‘the worst thing in Australia’ because it ‘distorts behaviour, cripples job creation, lowers growth, and locks people into housing that might not be appropriate for their needs’.
Premier Perrottet, who has called stamp duty an ‘inherently terrible tax’, floated axing it completely when he was treasurer.
He wanted 80 per cent of homes across the state to have the option of paying an annual land tax, and buyers would be eligible regardless of whether they were purchasing their first home.
However, he conceded such large-scale reform couldn’t be achieved without the help of the Commonwealth
‘It is a massive impediment for people getting into the housing market,’ Mr Perrottet told reporters.
‘But the reality is, state governments can’t do away with stamp duty without support from the federal government.
‘This is a moment for the federal government and the state governments to work together to unlock opportunity and economic opportunity for people going forward.’
The NSW government rakes in 32 per cent of its revenue from stamp duty which was worth $12.2 billion in the 10 months to April 2022, according to Revenue NSW.
This has soared from 18.3 per cent 10 years ago as house prices skyrocketed.
NSW Treasury predicted switching to a land tax would collect about 20 per cent less revenue than the current system.
Labor opposes the move to a land tax, with the state election coming up in March.
In the 2020-2021 financial year, $9.6 billion of stamp duty was collected.
Even with house prices tapering off in recent weeks, and even falling in some suburbs, the state government is likely to have taken in $14 billion in stamp duty by the end of the 2021-2022 financial year on June 30.
Monthly revenue from stamp duty surged during the Covid pandemic from a low of $450 million in May 2020 to a peak of $1.6 billion in October and December 2021.
The figure dropped to $976 million in April as house prices stabilised or fell.
Premier Perrottet, who has called stamp duty an ‘inherently terrible tax’, floated axing it when he was Treasurer but then backed down saying he needed federal government support
The median average stamp duty in Sydney is $49,934. Pictured is an auction at Hurlstone Park in Sydney’s inner west