A new property tax has been slipped before the NSW parliament in the wake of Treasurer Wayne Swan’s election-year Budget.

The tax, which was recently announced by Lands Minister Tony Kelly, will be applied to properties selling for more than $500,000 in both the residential and commercial sectors. This will add an additional $200 to fees for an average Sydney house purchase worth $600,000. Beginning from 1 July 2010, the tax is estimated to bring the government approximately $90m annually.

“What we are seeing here is the Keneally government trying to claw back the GST handed back to the commonwealth for hospitals the only way it can – by hitting property owners hard and fast,” said REINSW president Wayne Stewart.

Describing the move as a “tax on the mortgage heartland of NSW”, Stewart said that over half of the 50 local government areas in Sydney had house prices in excess of $500,000. "That means in hundreds of suburbs across Sydney alone, homebuyers will get hit with additional fees of anywhere between $200 and $1,000 for properties valued up to $1m.”

The new tax will be imposed at a rate of 0.2% for land transactions between $500,000 and $1m. For purchases above $1m, the tax will be charged at a rate of 0.25%, with a $1m home attracting an extra $1,000 in fees.

The Property Council of Australia has also urged the NSW government to reconsider the tax, stating that it will damage growth and investment. “NSW is a repeat offender when it comes to introducing new taxes on residential and commercial properties,” said NSW scting executive director Glenn Byres. “NSW has a fragile investment climate and construction levels are only beginning to creep back from 50-year lows. We should be looking to wind back taxes, not add to the burden of homebuyers and investors,” he said.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now