Amid the property boom, investors may be wondering whether they are better off waiting it out, or biting the bullet and purchasing now?
To alleviate the pressure of the upfront cost for first home buyers, there is widespread support for NSW government to overhaul stamp duty and replace it with a $25,000 grant for first home buyers. This would initially allow all buyers to choose paying stamp duty or an annual levy.
On Friday last week the NSW government released the below updates:
- Initially the top 20% of NSW residential properties would not be eligible and would continue to pay stamp
- Purchasers will have the option to pay the new land tax or the once off stamp duty
- Once a property has opted in for land tax this cannot be changed back for future purchases
- For owner occupied purchases
- A fixed once off fee of $400 plus 0.30% of the unimproved land value which is on average is $460k across greater Sydney
- For investment purchases
- A fixed once off fee of $1500 plus 1.10% of the unimproved land value which is on average is $460k across greater Sydney
- New first home buyer $25k cash grant is to replace the existing stamp duty concession
New $25k first home buyer cash grant
- Proposed to replace the existing stamp duty concession as NSW transitions to land tax away from stamp duty
- No further information available as of yet as to the qualifying criteria
Implications of removal of stamp duty
- Short term uplift in property prices between 4-6% over the next 3 years as affordability improves
- Further leg up for first home buyers as affordability improves
- Encourage housing mobility as downsizers will be encouraged to sell as the barriers to purchasing are reduced
- Higher taxes elsewhere (GST reform) to plug the hole in state revenue
The NSW government has been seeking to phase out stamp duty in favour for an on-going land tax for the last 6 months, with an expected roll out date in the second half of 2021.
Max Harris | Azura Financial