In a bid to increase the supply of new homes, stamp duty charges have been cut in this year’s New South Wales state budget, handed down by Treasurer Eric Roozendaal MLC on Tuesday.
According to the proposed budget, buyers will now be exempt from paying stamp duty on off the plan purchases under $600,000 for two years. Buyers over 65 purchasing new homes are also exempt from the duty when buying new homes up to the value of $600,000.
Developers are also set to benefit from the budget, with homes currently under construction or newly completed with a purchase price under $600,000 now attracting a 25% reduction in applicable stamp duty.
“The Government has done the right thing in recognising that cuts to stamp duty targeted at new homes will drive supply and lend a hand to homebuyers,” said NSW Acting Executive Director of the Property Council of Australia, Glenn Byres.
According to the council, the cuts are a direct response to a proposal provided to the state government during the pre-budget submission. While pleased with the inclusions, the Council are disappointed that the government has decided to proceed with its ‘ad valorem’ tax on land and property transfers.
“The new ad valorem tax – effectively a secondary stamp duty – remains a black mark on the Budget and should be ditched,” said Byres.“It won’t only reach residential projects – but will significantly add to the cost of bringing industrial parks, retail centres and commercial office space to life.“
However, the government confirmed that the new ad valorem tax will be included, costing homebuyers and additional $190 for houses with a value less than $500,000. For purchases over $500,000 an additional 0.2% tax will be charged, with properties over $1 million facing an additional 0.25% charge.
Overall, the budget addresses Sydney’s pressing need for an increase in housing, says Byres. “Sydney faces an enormous task in providing 26,000 new homes a year to accommodate the inevitable growth in population. Stamp duty cuts targeted at new homes elevate the prospects of bringing forward supply that fits the demands of the Metropolitan Strategy.”