NSW property investor land tax revenue to rise 5.2 percent annually

The NSW land tax revenue uplift is largely due to expectations for higher average land values than previously forecast the budget papers said

NSW property investor land tax revenue to rise 5.2 percent annually
NSW property investor land tax revenue to rise 5.2 percent annually

NSW property investors are set to pay $4.8 billion in land tax revenue in 2021-22, with a Treasury forecast it will grow by 5.2 per cent annually over the next four years.

“This uplift is largely due to expectations for higher average land values than previously forecast,” the NSW state budget papers advised.

The budget papers forecast NSW stamp duty will peak in the upcoming budgetary year at $11.4 billion, up from the $9.3 billion windfall in the current year, and almost double the $6.9 billion in 2020.

However due to the bring forward in buying, the next three years will then see stamp duty revenues fall to initially $10.9 billion, then $10.1 billion, and back to $9.2 billion by 2024-25.

The historic unreliable rollercoaster nature of stamp duty revenue is in part the reason why the NSW Treasurer Dominic Perrottet has signalled his intention to shift from the upfront stamp duty cost for buyers towards an annual land tax on every property owner.

There was no date given for the phased introduction to a wider annual land tax in the NSW budget.

Nor was there any housing grants and concessions announcements.

Some $1.2 billion has gone to the benefit of first home buyers over the past two years. The number of first home buyers was up annually by more than a third.

The papers noted the current strength in the housing market, in terms of price growth and new construction, was mainly reflected in houses rather than units, and until recently had mainly been underpinned by demand from owner-occupiers.

The Sydney house price boom is tipped by NSW Treasury to peak in late 2021, with house prices having surged by over 20 per cent during the pandemic.

Residential prices are forecast to remain “materially higher “ over the next four years.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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