The NSW Premier, Dominic Perrottet, has announced a major election promise that all home buyers in NSW can choose a lower ongoing annual land tax instead of paying stamp duty.
The proposed reform would benefit apartment buyers the most, with land tax payable on a $1.5m property taking about 46 years to equal the same outright cost incurred by stamp duty. The First Home Buyer Choice scheme, which began on January 16, allowed first-home buyers to choose between paying stamp duty or an ongoing annual land tax on properties under $1.5m.
However, the government’s expanded stamp duty reform would increase the $1.5m cap by $50,000 a year starting in the 2023-24 financial year. Buyers would be able to own two properties under the land tax scheme, although additional homes would incur stamp duty.
Treasurer Matt Kean stated that over 1,000 people have opted for the scheme since January 16, and the government’s goal is to give home buyers a choice. The Premier called stamp duty a “terrible tax” that is a barrier to people purchasing their home and said that the policy was about enabling buyers to move up the property ladder and make choices that suit their family and circumstances. In comparison, Labor’s policy for first home buyers would abolish stamp duty for homes up to $800,000, increasing the current cap by $150,000.
Managing Director of Sydney-based mortgage brokerage firm Pure Finance, Brendan Dixon, believes that replacing stamp duty with a land tax would benefit apartment buyers most, as they command less land value.
However, he points out that the annual land tax for apartments varies by building and location. In an example of a $1.5m apartment in Sydney’s inner-city suburb of Surry Hills, the stamp duty would be $66,700, while the annual land tax would cost $1,445. Dixon believes that in this example, the owners would need to remain in the property for 46 years for it to be worth paying the lump sum stamp duty.
»Dominic Perrottet announces major election promise«
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