Swapping stamp duty for a property tax could save some home buyers serious cash, with new modelling showing it could be the better option for those looking to hold their home for the medium to short term.
Stamp duty is the more affordable option for buyers staying in the one home for decades, but land tax is the cheaper option for those moving more frequently.
Domain chief of research and economics Dr Nicola Powell said it would take years for buyers to fork out property tax that would be comparable to stamp duty, making the tax a better option for those purchasing a home for the short to medium term. It would take just six years for an investor purchasing a $1.5 million property, as they face a higher proposed annual rate of $1500 plus 1.1 per cent of the unimproved land value.
Powell said the state government should also look to adjust the stamp duty rate brackets, which were linked with movements in the consumer price index. Given property price growth had soared well above this, more NSW buyers were now paying higher rates of stamp duty. A property tax could bring underused land to the market and encourage homeowners to move more frequently, which he supported. However, he said he was concerned that reducing upfront costs for investors could lead to more speculation and rental market churn, and he would prefer to see the property tax limited to owner-occupiers.
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