Stamp Duty Reform - What Does This Mean For You?
The NSW Government has proposed reduced stamp duty for residential property, in a move it is labelling ‘the most significant reform in a generation’.
Under the proposed changes, which are planned to come into effect from July, 2019 – the seven price brackets that determine how much stamp duty is paid will rise in line with inflation. NSW will be the first state that will index stamp duty brackets to CPI, a change that will promote savings on residential property transactions.
NSW Treasurer, Dominic Perrottet stated that the reform will ‘benefit many buyer types, from first homebuyers, downsizers or upgraders’. The reform, which seeks to peg stamp duty to CPI, will ‘reduce the tax burden on homebuyers’.
Although the stamp duty savings will be modest in the short term, over the long term, they will be substantial which will make it easier for people to realise the dream of owning their own home. Director of Residential Sales at Colliers International, Peter Kerras outlines that ‘the reforms on stamp duty may allow purchasers to use more of their savings upfront towards the purchase of a property given the reduced burden of stamp duty’.
Under the First Home Owners Grant, which was introduced in 2017, first home buyers pay no stamp duty on new homes up to $600,000, before it shifts to a sliding scale between $600,000 - $800,000. However, it is unclear how the First Home Owners Grant may be impacted by the proposed changes in stamp duty. Peter Kerras goes on to state that ‘the reform will be beneficial, particularly for purchasers that cannot access the current First Home Owners Grants.'
It goes without saying that the State Governments move to reduce the burden of stamp duty for purchasers of residential property will greatly assist both buyers and sellers of property in NSW.