07 November 2018
In a move to address housing affordability, NSW Treasurer Dominic Perrottet announced on 5 November 2018 that the NSW Government would seek to index stamp duty brackets to the Consumer Price Index from 1 July 2019. The reform would be the first in any state or territory in Australia.
At present, the amount of stamp duty paid by purchasers of residential property is determined by where the price of the purchase falls within seven price brackets. The stamp duty brackets have remained largely unchanged since 1986 despite the drastic rise of house prices, causing a 'bracket creep' in stamp duty.
Whether the reform will have any lasting impact on housing affordability in NSW remains to be seen. Spokespersons for the Real Estate Institute of NSW, Property Council of Australia and Housing Industry Association have welcomed the announced but expressed uncertainty as to whether it was a sufficient long-term solution.
A 2011 audit by former Treasury Secretary, Michael Lambert, recommended an entire overhaul of the current structure by way of an introduction of a 'Stamp Duty Replacement Tax', being a tax based on land value, to replace stamp duty, which is market value-based. Papers released by the NSW Business Chamber and the Australian Council of Social Service in 2016 raised similar proposals to replace stamp duty with broad-based land tax. There is however no indication that these proposals will be adapted as government policy.
The stamp duty changes on 1 July 2019 will only affect residential property transactions.
Authors: Vanya Lozzi & Yunsi Feng
Vanya Lozzi, Partner
T: +61 2 8083 0462
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