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Stamp Duty Relief for First Home Buyers

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The NSW government has pushed to temporarily pause stamp duty for first home buyers purchasing newly-built properties in a bid to bolster the state’s ailing construction industry.

On Monday premier Gladys Berejiklian announced the new scheme which she said would build on the $10,000 first-home owner grant which is accessible to those purchasing a home worth less than $600,000 or for those building a home worth $750,000 or less.

The stamp duty concession sees the threshold for stamp duty increased from $650,000 to $800,000.

For homes worth between $800,000 and $1 million, the concession gradually phases out.

NSW treasurer Dominic Perrottet said the changes would save first home-buyers up to $31,335 on a new $800,000 home and up to $15,668 on a new $900,000 home.

The $78 million stamp duty relief package will also apply, on a scaled basis, to newly-built homes valued between $800,000 and $1 million as well as to vacant land worth up to $400,000.

The NSW government hopes easing the burden of buying a newly-built property will stimulate the construction sector, which employs upwards of 400,000 workers across the state.

Related: Tax Shake-Up to Rock Property Market

▲ The new scheme will apply to newly-built homes and vacant land and will last for one year from 1 August.
▲ The new scheme will apply to newly-built homes and vacant land and will last for one year from 1 August.


“Thousands of people will see their bank balances benefit from this change—it will help get more keys into more front doors of more new homes,” Berejiklian said.

“It will also boost housing construction across NSW and support jobs in the building industry at a time when we need them more than ever before.”

The unemployment rate in NSW rose to 6.9 per cent in June as the national rate hit a two-decade high.

The chief executive of advocacy group Urban Taskforce, Tom Forrest, said the government’s approach to decision-making had worked well to date in dealing with the pandemic, but the same approach needed to be adopted in relation to the vexed issue of tax reform.

“The problem with stamp duty and payroll tax is they are distortionary,” Forrest said.

“They have the effect of creating a bias in the property market which slows down property transactions, and payroll tax is simply a tax on employment—it is nuts.”

“[The Urban Taskforce] has publicly called for the abolition of stamp duty and its replacement with a broadly based land tax or an extension of the application of the GST.”

NSW chief executive of the Urban Development Institute of Australia, Steve Mann, said the first homebuyer stamp duty relief package may not be enough to see significant recovery from Covid-19.

“We need to see stimulus across a broad range of homebuyer profiles, including upsizers who need to accommodate family growth, downsizers who are looking to offload larger mortgages and investors who play an important function in our rental market,” Mann said.

Housing Industry Association NSW executive director David Bare also weighed in, stating the scheme changes would create stamp duty arrangements that “better reflected” the price of new homes across the state.

The NSW government has been looking to reform stamp duty as part of a major federal financial review commissioned last year by Perrottet and published earlier this month.

The year-long review, led by former Telstra chief David Thodey and includes former New Zealand prime minister Bill English and former federal finance secretary Jane Halton, recommended stamp duty should be abolished, with homeowners given the option to opt-in to a land tax.

The report also suggested that state governments, in consultation with the Commonwealth, consider options for lifting the GST rate and expanding its base over the medium to longer-term.

Federal treasurer Josh Frydenberg has previously ruled out an increase in the GST, and said if the states wanted to embark on tax reform they would get no financial support from the government.

NSW estimates stamp duty costs the state economy about $2.35 for every collected dollar in lost income, compared with an estimated 16 cent for an annual land tax.

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Article originally posted at: https://theurbandeveloper.com/articles/stamp-duty-nsw-first-home-buyers