KEY TAKE OUTS
Stamp duty is the tax paid to the Government every time someone purchases a property. On Tuesday our Treasurer, during the State budget planning, announced the possible abolishment of stamp duty due to it being “one of the biggest financial barriers to home ownership”.
What does this mean for NSW? It means another tax will need to take its place…
Currently, if you purchase a home, you are liable to pay stamp duty. This tax is based upon the purchase price of your home, the higher the purchase price, the more you pay. First Home Buyers (subject to meeting certain eligibility criteria) are currently exempt from stamp duty, so the State Government is looking offer First Home Buyers a grant of up to $25,000.00 in place of the exemption that every buyer would then have the benefit of.
Mr Perrotet believes that “This is a vision for every person and family in NSW – from first home buyers trying to get a foot on the property ladder, to frontline workers moving to service our regional communities, and retirees who are ready to downsize.”
While this may seem appealing to Australians, with the abolishment of any tax comes another. Mr Perrotet is suggesting the gradual introduction of a land tax. This would be an annual tax based on the value of the land.
Currently in NSW you are exempt from land tax on your own home (principal place of residence) and you are only liable for land tax in the event that you own property whose collective value exceeds the threshold (which for 2020 is currently $734,000).
With the average median price of housing in NSW being $870,000 (which would cost you approx. $34,000 in stamp duty) the thought of not paying stamp duty is certainly appealing, but at what cost?
Land tax is currently approx. 1.6% of the property value (above the threshold), however if there were no thresholds and this became an annual tax would we be looking at paying $13,920 every year?
Definitely food for thought…
ABOUT CARINA NOVEK:
As a Licensed Conveyancer, Carina specialises in property law. She has over 20 years experience in conveyancing and is the perfect person to help get you into your first home today!
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