From Saturday, first home buyers in NSW will have the option to choose between paying stamp duty or a land tax after the premier’s signature property reform passed parliament.
- The Premier was eager to pass the bill before parliament breaks for the year
- The scheme will cost the government $728.6 million over the next four years
- Labor promises to repeal the legislation if they win the March 2023 election
The legislation was opposed by Labor and Greens but passed with the support of the Shooters, Fishers and Farmers, One Nation and the Reverend Fred Nile.
The new laws mean from this weekend first home buyers can choose to pay up-front stamp duty or a smaller annual land tax of $400 plus 0.3 of the property’s land value.
The scheme is only on offer for properties costing up to $1.5 million or vacant land up to $800,000.
However, the scheme, called ‘First Home Buyer Choice’, won’t come into effect until January 16, so those who buy before then will get a refund on their stamp duty if they want to take up the land tax option.
ABC analysis shows for a $1.5 million property in Penrith stamp duty would cost almost $67,000 while land tax would be $2,500 each year.
And for a $860,000 apartment in Campsie, stamp duty would be almost $34,000 and land tax would be $800 annually.
NSW Treasury data shows if someone purchased a $1 million house and sold it 10 years later, the annual land tax payments over the 10 years would total $19,881 (in present value terms) compared to $40,090 in up-front stamp duty — a saving of $20,209.
Treasurer Matt Kean said this would cut the time people spend saving for a deposit, which is on average around two years.
“We are giving people the opportunity to decide for themselves what best suits their financial situation,” he said.
“Those buying a home to live in for life can still choose stamp duty, but for many, paying an annual tax for the limited time they actually live in the property will make more sense,” he said.
The government launched an online calculator to help prospective buyers work out what was better for them and the main interest in the tool came from those in the electorates of Granville, Hawkesbury, Riverstone, Ku-ring gai, Seven Hills, Paramatta and Coogee.
But for weeks Labor has argued the government should take the legislation to next year’s election and called the land tax a “forever tax” that will contribute to housing unaffordability.
Labor leader Chris Minns on Thursday said a land tax could leave buyers worse off as it’s based on the value of the house which will likely grow as wages stay stagnant.
“Our concern is that future governments will jack up the land tax rate, and if you’re already on that merry-go-round you have to trust this Premier and all future premiers not to up the land tax rate for your family home,” Opposition Leader Chris Minns said.
But the premier accused Labor of running a scare campaign, as the legislation caps increases in the annual land fee at 4 per cent and he says the scheme is to help people into their first home, not their “forever” home.
Mr Perrottet, who was eager to pass the bill before parliament breaks for the year, would not say whether the government made concessions with the crossbench to get the bill through but said there had been “constructive discussions”.
The scheme will cost the government $728.6 million over the next four years and Labor has promised to repeal the legislation if they win the March 2023 election.
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