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The NSW government has announced that it will index stamp duty brackets to the Consumer Price Index (CPI), effective on transactions on or after 1 July 2019.
Treasurer Perrottet has said that it is the “most significant” stamp duty reform in a generation, with the current system having remained largely unchanged for over 30 years.
“We haven’t seen any significant action on stamp duty brackets since 1986 when the median house price in Sydney was $100,000; now it has climbed to $1 million,” Mr Perrottet said.
“Whether you are a first home buyer, a downsizer or upgrading to the family home, you will ultimately benefit as a result of this reform.”
The Treasurer continued: “Pegging stamp duty to CPI will reduce the tax burden on home buyers, allowing them to put more money towards a deposit.”
The government observed that, over the past 15 years (2002–2017), “bracket creep” had resulted in the average rate of stamp duty payable increasing from 3.37 per cent to 4.05 per cent as the median house price in Sydney increased from approximately $400,000 to $1 million.
The government claimed that if stamp duty brackets had been indexed to CPI 15 years ago, the amount payable on a $500,000 home would today be approximately $2,000 lower (an 11.0 per cent tax cut), while the stamp duty payable on a $1.5 million home would be approximately $6,400 lower (a 9.4 per cent tax cut).
“The Liberal & Nationals Government is committed to addressing housing affordability, cutting taxes and easing the cost of living pressures for the people of NSW,” Mr Perrottet added.
“This reform is just another example of us delivering on our promise, and combined with the introduction of new first home buyer concessions, it is now becoming easier for people to realise the dream of owning a home.”
Property Council NSW executive director Jane Fitzgerald has welcomed the government’s reform.
“In 2018, stamp duty adds almost $50,000 to the purchase of the average property in Sydney and reducing what purchasers have to pay in tax will make buying a home that little bit easier,” Ms Fitzgerald said.
“Stamp duty is a handbrake on transaction activity and locks people into housing which is not appropriate for their needs.”
Ms Fitzgerald added that the indexation of stamp duty rates would provide home buyers with modest savings initially but would “ensure no repeat of the current situation where stamp duty is a barrier for first home buyers, upsizers and rightsizers”.
The executive director said that despite cooling housing market conditions, housing affordability “remains a long-term issue” for NSW and called on the government to pursue further reforms.
“Implementing structural changes to the stamp duty framework is a great long-term investment in providing more affordable housing for NSW,” Ms Fitzgerald said.
“The Property Council urges the Treasurer to go further and adjust the rates themselves to realign average stamp duty payments with the purchase of the average home.”
[Related: Apartment prices could dip by 8% by 2019]
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