NSW to index stamp duty brackets to CPI
NSW is set to index stamp duty brackets to the consumer price index.
The seven price bands that determine how much stamp duty by home buyers will be adjusted for inflation under the scheme to start in mid-2019, The Daily Telegraph reported today.
Stamp duty has been unchanged in NSW for 32 years while the median house price has risen by an estimated 1000 per cent.
When the rates were set in 1986 the median Sydney dwelling price, according to CoreLogic, was $80,000 compared with the current median house price of around $1 million.
Last financial year, NSW residential and commercial property buyers paid a total $9.8 billion in stamp duty after 228,000 sales.
Stamp duty accounts for 28 per cent of all state tax revenue.
A typical buyer in Sydney pays about $42,000 duty when purchasing a home.
The move is tipped to save about $500 on the average property transaction within years, Treasurer Dominic Perrottet is expected to tell media today.
“The indexation of Stamp Duty is a step forward in reducing the taxation imposts on housing,”stated Tim Reardon, HIA’s Principal Economist.
“This is the first adjustment to Stamp Duty rates since the average house in Sydney cost just$80,000.
“State governments have become increasingly reliant on Stamp Duty from housing as a mainsource of revenue.
“Around $1 in every $5 of state government revenue comes from Stamp Duty on houses.
“The announcement by the NSW Government to address bracket creep for the first time in over30 years is a meaningful contribution to ensuring that the impost of Stamp Duty does not continue to grow.
“Stamp duty is an inefficient tax and it has a disproportionately high impact on households that are vulnerable due to changes in their circumstances including employment, health or other family related matters.
“Stamp Duty is also a volatile source of tax revenue, as the NSW Government is currently experiencing. A small fall in house prices has had a disproportionate impact of state government revenue.
“A better long term solution would be to phase out Stamp Duty altogether and replace it with aform of revenue that doesn’t punish buyers for wishing to pursue their dream of owning a home,” concluded Mr Reardon.