There's no doubt that stamp duty is a big financial barrier to homeownership. According to the NSW Treasury, it can take 2.5 years for an average worker to save up enough money to cover stamp duty, adding $34,000 to the cost of buying an average home.
NSW Treasury statistics also reveal that, since 1990, while average earnings in NSW have trebled and average house prices have increased five times, average stamp duty on dwellings has increased more than seven times.
After many years of debate and numerous reports calling for change, the NSW government, led by Treasurer Dominic Perrottet, has decided to act, proposing an annual property tax as an alternative to upfront stamp duty.
Property buyers will be given a choice: pay an annual property tax instead of stamp duty (and land tax where applicable), or pay one-off stamp duty. The annual property tax would be based on land value – a fixed amount plus a rate applied to the unimproved land value of an individual property, similar to council rates. Stamp duty concessions for first home buyers could be replaced with a grant of up to $25,000.
The government has released a consultation paper and is seeking public feedback by 15 March.
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