Home buyers in NSW are set to save tens of thousands on their purchase as the state undertakes one of its biggest tax reforms by removing stamp duty.
Treasurer Dominic Perrottet announced the reform as Australia’s biggest state grapples with a $16 billion budget deficit.
Perrottet said stamp duty will now be optional, with buyers given the option between paying a large property tax upfront or a smaller annual land tax on new property transactions. The state government estimates the policy shift will add $11 billion to NSW’s economy over four years.
The tax would be set at a fixed rate, in addition to a rate applied to the unimproved land value. And, once the property becomes subject to the new tax, future owners will also pay the tax.
Owner-occupied homes would attract a lower rate of tax than investment properties, but Perrottet said there would also be protections against landlords subsequently hiking rental rates.
The Treasurer said the state’s centuries’ old stamp duty structure needed an update, but the state government will consult with the community on its proposed model until March.
The median value of a Sydney home is $860,955, with stamp duty adding as much as $34,372.80 to the cost of purchasing. Perrottet noted that while it took one year to save stamp duty in 1990, it now takes on average two-and-a-half years.
Under the plan, first home buyers who would previously have been eligible for stamp duty concessions will instead receive $25,000 grants.
“This is the reform we need to implement,” Perrottet said, adding that he hopes to have stamp duty overhauled quickly.
“When it comes to our economy and the biggest impediment on economic growth, the number one area for states are taxes,” Perrottet said.
“Particularly inefficient taxes that stifle economic growth, like payroll tax. But the worst which we’ve been speaking about for some time is stamp duty, it is an impediment to home ownership.”
Those who have already bought a home and who have already paid stamp duty on the purchase will not be impacted by the new plan.
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