There is a proposal to scrap “one of the biggest financial barriers to home ownership” on new homes in NSW under the state budget.
NSW home buyers could be spared from paying stamp duty on new homes if a new government plan becomes reality.
Instead of an exemption from stamp duty, first-time buyers would get a grant worth up to $25,000 under the proposed overhaul.
The state Treasurer revealed in Tuesday’s budget plans to ask the public’s opinion on scrapping stamp duty and replacing it with a smaller annual tax.
Stamp duty is a tax the government charges every time someone buys a new property. First-time buyers already benefit from an exemption if the home they’re buying costs less than $1 million.
Dominic Perrottet said the current system was “one of the biggest financial barriers to home ownership” in NSW and said an overhaul would enable more people to be able to buy a house.
“This is the single most important economic reform we can tackle to turn the Australian dream into NSW’s reality,” Mr Perrottet said.
“This is a reform proposal for NSW where more people can own their home and have more freedom to choose the right property for their family at every stage of life.
“This is a vision for every person and family in NSW – from first home buyers trying to get a foot on the property ladder, to frontline workers moving to service our regional communities, and retirees who are ready to downsize.”
The Treasurer said his plan would incentivise home ownership by installing a lower rate for those who live in the houses they own, and a higher rate for investors and commercial properties.
Stamp duty collection has traditionally been one of the state’s biggest revenue sources, earning NSW $7.4 billion and $6.9 billion, respectively, in the past two financial years.
But Mr Perrottet said scrapping the duty could end up earning the state more money.
“This model may inject more than $11 billion into the NSW economy in the first four years and boost NSW gross state product by 1.7 per cent over the long term,” he said.
The public will be able to have its say through an online survey that went live on Tuesday.
Submissions will close in March, and the government said it would report on the findings in the middle of next year, after which the plan could be implemented.
Opposition Leader Jodi McKay said the government’s failure to consult Labor on the change showed the Treasurer wasn’t “serious” about taxation reform.
“You cannot implement major taxation reform in this state without both the government and the opposition agreeing,” Ms McKay said.
The Opposition Leader also said a first look at the details in the budget showed the stamp duty change would mean farmers might have to pay land tax.
“That is what the Treasurer is proposing – a land tax on farm land,” Ms McKay said.