Modelling shows swapping stamp duty for a property tax could be the better option for those who won’t hold onto their home long-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.
New modelling shows that it will take years for buyers to fork out property tax that would be comparable to stamp duty.The changes would reduce upfront costs for buyers but add another bill to the household budget. While the lower annual tax would add up over the years, new Domain modelling shows that switching could leave some better off.
On a $1.5 million property, it could take 18 years to accrue the stamp duty equivalent in property tax if homeowners were to pay a proposed annual tax rate of $400, plus 0.3 per cent of the unimproved land value. The top 20 per cent of NSW residential property would not be eligible for buyers to opt in to property tax and would continue to attract stamp duty, as previously reported by. The 80th percentile for all NSW dwellings was at $1.54 million in the March quarter, according to Domain data.
While stamp duty was paid by the buyer, evidence showed it comes out of the price received by the vendor, Martin said. He was concerned any savings on upfront costs would be added to a buyer’s spending budget, ultimately resulting in more money for the vendors and putting upward pressure on prices.
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