NSW proposes axing stamp duty in favour of land tax

author-avatar By on November 17, 2020
NSW proposes axing stamp duty in favour of land tax

Photo by Ben Warren on Unsplash

New South Wales has announced plans to do away with stamp duty in an effort to drive post-COVID recovery.

NSW Treasurer Dominic Perrottet said in his budget speech the government was launching a proposal to give home-buyers the choice to axe stamp duty in favour of a land tax. 

"Today we turn theory into the first firm step, seeking feedback on a proposal to transform our property tax system," Mr Perottet said.

"This proposed model would give buyers a choice to axe stamp duty at the point of purchase and choose an annual property charge instead.

"There would be no impact unless you are purchasing a property and you make the choice to change."

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
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Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
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  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
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  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 25, 2021. View disclaimer.

Mr Perottet said the proposal could generate 75,000 new jobs and add an extra $3,300 of income for every household in NSW.

An annual property tax based off land value would replace stamp duty, and buyers will get the choice of paying the transfer duty or the property tax, with rates differing for owner-occupiers and investors. 

Current stamp duty concessions for first-home buyers would be replaced with a $25,000 grant, with the option to use the money on refurbishing the property. 

"Stamp duty is a relic from a bygone era when you picked one career, started a family, bought a home and basically settled in for life," Mr Perrottet said.

"It adds tens of thousands of dollars to the cost of the biggest financial commitment most people ever make."

Buying a house in Sydney at the median price of $1,154,406 would cost you $48,795 in stamp duty. 

Stamp duty comes under the umbrella of transfer duty, a state government tax, which the NSW government forecasted will make them 7.926 billion in revenue in 2020/21. 

NSW also announced in July first-home buyers would see thresholds raised for stamp duty, from $650,000 to $800,000 for new homes, and from $350,000 to $400,000 for vacant land. 

$29 billion to ensure economic recovery 

In addition to stamp duty changes, Mr Perrottet announced sweeping changes to payroll tax. 

The threshold is set to be raised from $1 million to $1.2 million and the rate will be dropped to 4.85% for two years, while companies who create 30 new jobs in NSW will have payroll tax scrapped. 

Smaller businesses will also receive $1,500 digital vouchers to put towards government fees and charges. 

"These changes mean around 36,000 businesses will save on average $34,000 each year for the next two years – including 3,500 that will pay no tax at all," Mr Perrottet said. 

"It's all about getting Government out of the way so businesses get on with business." 

Unions NSW Secretary Mark Morey slammed the budget, and said Mr Perrottet was holding the state back through a misguided mix of iedology and loyalty to big business. 

"While the Commonwealth tries to put money in the pocket of workers through tax cuts, Dominic Perrottet is picking their pocket with wage cuts before it can be spent," Mr Morey said. 

“This is why the Budget papers forecast a sluggish return to jobs growth.

"Under the current misguided approach, it will be almost four years until pre-crisis employment levels return."

Mr Perrottet also announced the 'Out and About' scheme, where every adult in NSW will receive four $25 vouchers to spend at entertainment and cultural venues to kickstart economic recovery. 

The vouchers are required to be used separately and in one transaction; two can be used at restaurants, cafes, and clubs, and the other two can be used at cultural centres, performing arts, cinemas, and amusement parks. 

"In our time of need, we encourage anyone who can, to go out and enjoy the best our State has to offer, and support the businesses doing it tough," Mr Perrottet said. 


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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