KEY TAKE OUTS:
- Changes to surcharge purchaser duty as a result of the 2024-2025 State Budget
- Changes to surcharge land tax as a result of the 2024-2025 State Budget
- Changes to land tax thresholds as a result of the 2024-2025 State Budget
BODY OF BLOG:
What you might already be aware of is that the NSW 2024-2025 State Budget was handed down earlier this month. What you might not be aware of is the impact on transfer duty (formerly called stamp duty) and land tax and how this might affect you.
The 2024-2025 State Budget set out some measures which will be implemented by way of the introduction of the Revenue Legislation Amendment Bill 2024. This Bill makes changes to certain revenue legislation such as the Duties Act 1997 and the Land Tax Act 1956.
Surcharge purchaser duty
Surcharge purchaser duty is payable by foreign buyers who purchase residential property in NSW. The amount payable is 8% of the price of the property. This is payable by foreign purchasers, on top of any transfer duty (formerly called stamp duty).
The introduction of the Revenue Legislation Amendment Bill 2024 will result in the rate of surcharge purchaser duty increasing to 9% from a 1 January 2025.
On the purchase of a one-million-dollar property, this means:
At present, the transfer duty would be $39,775.00 and the surcharge purchaser duty component would be $80,000, totalling $119,775. From 1 January 2025, the surcharge purchaser duty component would increase to $90,000, bringing the total duty payable by the foreign buyer to $129,775.
Land Tax
Surcharge Land Tax
Surcharge land tax is payable by foreign buyers on residential property they own as at midnight on 31 December in any year. If you are a foreign person, in addition to any land tax you may be required to pay, you must also pay surcharge land tax. If you are a foreign person who doesn’t pay land tax, you may still be required to pay the surcharge.
The introduction of the Revenue Legislation Amendment Bill 2024 will result in the rate of surcharge land tax increasing from 4% to 5%. This will apply for 2025 and subsequent land tax years.
Land tax thresholds
Land Tax is an annual tax charged on the land value of all the property you own that is over and above the land tax threshold. Notwithstanding this, your principal place of residence is usually exempt and not taken into consideration when determining your land tax liability.
Land Tax is calculated on the total value of all your taxable land above the threshold, as of 31 December each year. If the combined value of your land does not exceed the threshold, then you will not pay land tax.
The thresholds are applied as follows:
- General threshold: $100 plus 1.6% of the land value above the threshold, up to the premium threshold
- Premium threshold: $88,036 plus 2% of the land value above the threshold
Your liability for each year is based on the value of all the land you owned on 31 December in the previous year. As such, any changes to the land you own this year (sale of an existing property or purchase of another property) will only affect how much you pay next year.
The Land Tax thresholds for 2024 are as follows:
- General threshold: $1,075,000
- Premium threshold: $6,571,000
The general threshold for 2024 had increased by $106,000 from 2023. The premium threshold for 2024 had increased by $646,000.
Each year the thresholds increase, well, usually. The introduction of the Revenue Legislation Amendment Bill 2024 will mean that for 2025 and subsequent land tax years, the 2024 land tax thresholds set out above will remain.
This could very well mean that if you own a property other than your principal place of residence and haven’t previously paid land tax, you may start to incur a liability especially if the value of that property increases. As property value increases but the threshold stays the same, more property owners will start to incur land tax.
CONCLUSION
At Coutts, we pride ourselves on staying up to date with the latest legislative changes to ensure that you receive accurate and timely advice. Our extensive experience in handling transfer duty, surcharge purchaser duty, and land tax means that we can provide you with the insights and support you need to navigate these complex areas.
Understanding the impact of the 2024-2025 State Budget on your property investments is crucial. Whether you are a foreign buyer affected by the increased surcharge duties or a property owner dealing with new land tax thresholds, Coutts is here to guide you every step of the way. For expert advice and comprehensive assistance, please contact our office. Let us help you make informed decisions and manage your property-related financial obligations effectively.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licenced Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
Melina Costantino
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
