SYDNEY, 23 June 2022: From 16 January 2023, eligible first home buyers in NSW purchasing properties up to $1.5 million in value will be able to choose whether they pay stamp duty upfront or an annual property tax when purchasing their property.
Following on from the earlier announcement of the proposed Shared Equity Scheme, this measure was announced as part of the NSW Budget 2022–23 and represents the next steps in the NSW Government’s attempts to ease the financial challenges for first home buyers.
“The Tax Institute welcomes reforms to the stamp duty regime” said Julie Abdalla, Tax Counsel at The Tax Institute. “Stamp duty is an archaic and inefficient tax which imposes a significant financial barrier on mobility and distorts purchasing decision for all buyers.”
As noted in The Tax Institute’s tax insight, the benefits of an annual property tax are well documented.
“Annualised property taxes are much more efficient than stamp duty,” said Julie. “This reduces financial barriers and better supports Australians to determine where to live based on their personal circumstances such as the need to upsize or downsize, employment opportunities, children’s education, and their own social preferences.”
Enabling legislation will still need to be introduced. Eligible first home buyers who exchange contracts between the enactment of the legislation and 15 January 2023 will be able to apply to opt-in and receive a refund or transfer of their paid stamp duty.
Importantly, the choice to opt-in by the first home buyer will not lock the property into the property tax regime for future purchasers as was originally envisaged in the NSW Government’s Property Tax Proposal.
“The proposed changes are incremental and represent a small but positive step in the right direction. We would like to see this measure expanded to include purchasers other than first home buyers, as originally contemplated in the NSW Government’s Property Tax Proposal and hope that the NSW Government pursues this reform in full," said Julie.
The NSW Budget 2022–23 also introduced a small number of other tax related measures, including: