PHOTO: Stamp duty is set to be scrapped in NSW saving new homeowners tens of thousands of dollars and replaced with an installment land tax system (pictured: a Sydney auction in October)
New South Wales, Australia’s most populated state, is taking the lead this coming year in scrapping a hated tax that sees someone buying a median-priced $1million house pay $40,000 upfront to state government coffers.
Liberal Treasurer Dominic Perrottet is proposing to give home buyers the choice of coughing up stamp duty straight away or paying land tax in installments.
Under his plan, a buyer planning to live in a typical Sydney house would have the option of paying $1,216 a year in land tax in quarterly installments, like council or strata rates.
A new land tax for owner-occupiers, living in their principal place of residence, would be at lower rate of 0.3 per cent – compared with the existing rate of 1.6 per cent for investors.
A NSW Treasury discussion paper, released in November, promised owner-occupiers would pay a lower land tax rate than investors.
The proposal is for people living in their own home to pay a 0.3 per cent land tax on every dollar above $755,000 plus $500 which would see still see a buyer of a median-priced $1million Sydney house pay $1,216 a year.
That amount would take 32 years to surpass the upfront $40,000 they would have paid in stamp duty and would be contingent on annual adjustments to the land tax threshold, known as the unimproved land value.
Public consultations close in mid-March and should the Labor Opposition or minor parties back the idea in Parliament, home buyers would get a choice between stamp duty or land tax from July 1, 2021.
An existing 1.6 per cent rate would continue to apply for investors and owners of commercial real estate, holiday homes and investment properties.
In 2021, those real estate owners not living in the property will be paying a 1.6 per cent tax for every dollar over $755,000 the property is worth, plus $100.
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