To help more Australians into their own home, the Victorian government recently announced investment that will fund a stamp duty concession of up to 50 per cent for residential property contracts from 25 November 2020 until 30 June 2021. In New South Wales, a proposal to change stamp duty was included in the budget, designed to help stimulate the economy after the COVID-19 recession. Read on to find out what these changes are and how they could impact home buyers in these regions.
Stamp duty concessions in Victoria
In its 2020-2021 budget, the Victorian government has undertaken to invest over $293 million to fund a stamp duty concession of up to 50 per cent for residential homes valued below $1 million.
This will be for property contracts entered into between 25 November 2020 and 30 June 2021, and will target newly built or off-the-plan homes. For existing homes, the stamp duty concession will amount to 25 per cent.
The concession is expected to provide considerable tax relief to first home buyers and will hopefully provide the stimulus first home buyers need to get into their own home.
Treasurer Tim Pallas said, “We will encourage Victorians back into the property market, by waiving up to 50 per cent of stamp duty on eligible homes, for the remainder of the financial year. And Victorians will be able to get into the property market sooner and with lower deposits, thanks to our $500 million Victorian Homebuyer Fund.”
The $500 million Victorian Homebuyer Fund, announced in the Victorian State Budget, will help first home buyers who don’t have a 20 per cent deposit. The fund will contribute to the purchase price in exchange for an equity interest in the property, reducing the size of the deposit required by the first home buyer.
Optional stamp duty in New South Wales
On 17 November 2020, Treasurer Dominic Perrottet handed down the New South Wales budget, which included several measures designed to help stimulate the economy in the wake of COVID-19.
Also included in the budget was a proposal to overhaul stamp duty and land tax, which would give first home buyers the choice of either paying stamp duty up front, or paying a property tax calculated on the unimproved land value each year the property is held. The measure is expected to help stimulate the economy by as much as $11 billion over the next four years.
Stamp duty is the tax that buyers are required to pay when buying a new home. The amount owing depends on the value of the property. For example, the duty on a $750,000 property would be $29,085. A considerable cost to first home buyers!
While stamp duty raised an estimated $8.3 billion for government in the 2019-2020 financial year, Mr Perrottet believes the duty discourages people from moving, and that replacing the duty with an annual land tax would help generate spending in other parts of the economy.
First home buyers are currently exempt from stamp duty if their home is worth less than $650,000 and receive concessional rates up to $800,000. For those who have already purchased property in New South Wales, the Treasurer has confirmed there would be no double taxation.
For more information, please see https://www.treasury.nsw.gov.au/property-tax-proposal.
Helping more first home buyers
Do you have questions about stamp duty and how the proposed changes in Victoria or New South Wales could impact you? Get in touch with our team of mortgage brokers to talk about financing your first home or your next home or investment property.
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