Stamp duty out, land tax in: downsizing easier?
THE NSW Fire Emergency Services Levy initiative was a bungled attempt to introduce a land tax in NSW.
Victoria did not bungle its attempt. It collects what is called Fire Services Property Levy.
Both states are now trying to replace stamp duty with land tax. Timed to perfection from these two governments’ perspective, because stamp duty revenue is set to plummet as the real estate market hits the skids due to COVID-19.
The NSW Government is also looking to reform stamp duty as part of a major federal financial review commissioned last year by NSW Treasurer Dominic Perrottet.
The issue of stamp duties has dominated the NSW review, with half the submissions raising issues with it.
“Stamp duty on residential properties are particularly costly as they add to the cost of buying a house and therefore discourage people from downsizing, or moving closer to preferred jobs, schools and family,” according to the NSW discussion paper.
A 2017 NSW Treasury report estimated stamp duty abolition would lead to a 25 per cent increase in property transfers. That’s an extra 70,000 property transfers.
The ACT Government has been slowly winding down its stamp duty and is replacing it with an annual land tax in a 20-year program.
Typically, the introduction of a land tax to replace stamp duty does not affect property owners until they sell their old house and move to a new one. So, if you stay put, you pay no land tax.
If you do move, you don’t pay stamp duty. Instead you pay an annual tax.
CPSA is interested what readers think about replacing stamp duty with a land tax. Will it make it easier to downsize?
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