The Australian residential real estate market is currently valued at approximately $7.1 trillion, representing the largest asset class in the country. To put this in perspective, Australia’s superannuation system, one of the largest in the world, is currently worth just $2.9 trillion and the entire Australian Stock Market is worth just $2.3 trillion.
Across the country the states and territories are well aware of the size of the real estate market and as such are taking significant strides to ensure it is supported. This was reflected in the latest changes to Stamp Duty in New South Wales, which will be music to the ears to both homebuyers and property investors.
This week we’re exploring the key changes to Stamp Duty in New South Wales, who is eligible and how you can access the benefits. It’s important to note that it is just a proposal at this stage, and will be open for consultation until March 2021.
What is the proposed change?
The proposal that has been put forward is to phase out stamp duty, which is often viewed as an inefficient and ‘lazy’ tax, however it does put a significant amount of revenue into the coffers of the NSW Government each year. Over the last financial year, this equated to approximately $7.4 million. The proposed change would afford property buyers the choice of paying stamp duty as has always been the case at the point of purchase, or paying an annual property tax.
This could be a significant win for those buyers looking to get into the property market, but can’t afford to pay both the deposit and the stamp duty, and don’t wish to pay Lender’s Mortgage Insurance (LMI) on top of that. For those that are planning to stay in the property for the long-term, and have no issues affording the stamp duty, the annual tax would likely be less preferable as they would end up paying more.
When are the changes likely to take effect?
We do not expect these changes to take effect until mid-2021, assuming that the proposals are approved. Whether this impacts the buying decisions of homeowners or investors is yet to be seen, but there may be some who prefer to sit on the sidelines on wait on some clarity regarding the proposed changes, particularly if it could mean a significant stamp duty saving.
The rest of the country will be watching these changes closely to explore if they should implement similar changes, however at this stage Victoria is the only other state that is currently putting forward such a change to support their residential property market.
If you have any questions about stamp duty or how these changes could impact you, feel free to reach out to our team.
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