Following mounting pressure in recent months to abolish property taxes the New South Wales government has put a temporary pause on stamp duty costs in another bid to boost the property market during the COVID-19 pandemic.
As of August 1, first home buyers in NSW are set to benefit from huge cuts to stamp duty, with reduced taxes available for those purchasing newly-built homes or vacant land up to the value of $1 million.
The stamp duty cuts however won’t be offered to those looking to purchase established properties.
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Stamp duty, a one-off, mandatory tax paid by homebuyers for the transfer of land from seller to owner, can be in excess of $40,000 on a median-priced house in Sydney’s pricey property market.
This new change will see first home buyers exempt from paying stamp duty taxes on properties under $800,000, up from the current threshold of $650,000, while properties under $1 million will benefit from a reduced stamp duty fee.
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You must pay transfer duty based on the property’s sale price or its current market value, and the amount owed can be calculated online.
The threshold for waiving stamp duty on vacant land will also increase from $350,000 to $400,000, with tax reductions available on land up to $500,000.
Concessions will taper for properties over the threshold with the biggest discounts available to lower priced homes, but the temporary stamp duty concessions could save first home buyers more than $31,000 in tax costs.
These new stamp duty concessions are being offered in addition to the existing $10,000 First Home Owner Grant, which in NSW is available to buyers on properties less than $600,000 or on new builds less than $750,000. Buyers who combine these first home buyer schemes are set to save over $32,000.
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The boost will also possibly see more jobs created in the construction industry after the unemployment rate in NSW rose to 6.9% in June.
Estimating around 6000 new home buyers could be able to benefit from the scheme, NSW Premier Gladys Berejiklian said the stamp duty concessions would help support new home construction and create jobs throughout the state.
“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,” said Ms Berejiklian.
The existing stamp duty exemptions in NSW were introduced in 2017, allowing first home buyers to avoid the hefty tax for properties under $650,000 or land under $350,000.
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NSW Treasurer Dominic Perrottet says the changes could save first homebuyers stamp duty of up to $31,335 on a new $800,000 home.
“The current scheme has already helped over 93,000 first home buyers since July 2017 and this will give the construction industry extra support as we face the challenges of COVID-19,” Mr Perrottet said.
According to news.com.au, Victoria is also reported to be considering a cut to stamp duty or an altered stamp duty scheme to boost their construction industry.
But experts warn temporary cuts are unlikely to suggest long-term reform to the taxes given their large revenue impact on state finances.
More information will be made available on NSW Revenue as it’s released.
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Words by Danielle Austin
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