NSW Premier Dominic Perrottet unveils election plan to ditch stamp duty for cheaper land tax

All NSW homebuyers will have the option to opt out of stamp duty for a lower annual property tax in a major election promise announced by the government.

Apartment buyers would benefit most from the reform, as the land tax payable on a $1.5 million property would take about 46 years to equal the same total cost incurred by stamp duty.

The proposed changes were announced by NSW Premier Dominic Perrottet on Sunday in an attempt to woo potential owners.

Starting January 16, first-time homebuyers can choose between paying stamp duty or a continuous annual property tax calculated at $400, plus 0.3 percent of the land value of their property, on properties of less of $1.5 million.

Under the First Home Buyer Choice scheme, stamp duty for a home valued at $1.5 million would cost around $66,700, while a property tax would incur an annual fee of around $3,850.

With those figures, it would take more than 17 years for the total land tax paid to exceed the total stamp duty paid.

However, the government’s expanded stamp duty reform would increase the $1.5 million limit by $50,000 a year starting in fiscal year 2023-24.

Buyers could own two properties under the land tax scheme, although additional houses would incur stamp duty.

Announcing the major tax reform in Peakhurst, in Opposition Leader Chris Minns’ Kogarah constituency, the prime minister said the policy was to give homebuyers “a choice”.

Stamp duty is a terrible tax. As the Treasurer said, it is a barrier for people to be able to buy their house”, said Mr. Perrottet.

“We want them to be able to continue to climb the ownership ladder and make the decisions that work for their family and their circumstances.”

The proposed changes were announced by NSW Premier Dominic Perrottet (pictured) on Sunday in an attempt to woo potential owners.

Treasurer Matt Kean said more than 1,000 people have already opted for the scheme since January 16.

“We know that it’s a family buying a $1m home in western Sydney and owning it for five years and then selling it, upgrading to a $1.5m home can save up to $90,000 under this scheme,” he said.

By comparison, Labor’s first-time homebuyer policy would abolish stamp duty on homes up to $800,000, raising the current cap by $150,000.

A discounted stamp duty rate would apply for properties under $1 million.

Big winner in proposed stamp duty cuts

The managing director of Sydney-based mortgage brokerage firm Pure Finance, Brendan Dixon, says that replacing the stamp duty with a land tax would benefit apartment buyers more, as they have less land value. land.

“An apartment block is a block of land, but the value of the land is divided among the apartments in the building and depends on what their allocation is,” Mr. Dixon told NCA NewsWire.

“So the annual property tax for apartments is much cheaper than for houses, but it will vary from building to building, and depending on the area you’re in.”

Using the example of a $1.5 million apartment in Surry Hills, a suburb of Sydney’s inner city, the stamp duty would be $66,700, while the annual property tax would cost $1,445.

‘In this example, the owners would have to stay in the property for 46 years to make it worth paying the flat rate stamp duty. Kind of obvious,” Dixon said.