Buying and selling real estate can be at once an exciting and stressful time in a person’s life. Finding a property that appeals, organising finance to make an offer and then steeling oneself to compete against other interest parties is a substantial undertaking for those who are new to the market. When you add paying stamp duty to this complex process, the costs and organisation involved can become taxing (pardon the pun). Today’s Belle Property blog looks at the current stamp duty requirements in NSW, and the proposed ‘pay as you go’ stamp duty structure under review.
At $8990 plus $4.50 of every $100 where the value is worth over $300,000 (based on the average property), stamp duty costs in NSW add a considerable sum onto the final cost of a property. If you’re not up to date with current legislative requirements, click here for further information on stamp duty obligations NSW. With housing availability dwindling and competition and price growing in many capital cities, conducting real estate transactions is a potentially expensive exercise. It is clear that getting into the property market is increasingly difficult for new home owners.
To address this problem and simultaneously boost the property market and local building industry, the Real Estate Institute of NSW have proposed a ‘pay-as-you-go’ stamp duty scheme to be considered in the upcoming state budget. The suggestion is that first home buyers would be able to pay off the stamp duty owed over a three year period, with the cost of the tax guaranteed against the property. With the removal of other first home buyer incentives that have been available in recent years and the limited support provided by the $7000 federally funded first home owner grant, this ‘pay as you go’ scheme would make the cost of entering the housing market more manageable.
While the NSW government intends to keep the exemption on stamp duty for newly built homes in order to propel the construction sector, State Treasurer Mike Baird has indicated that REINSW’s proposal was ‘under active consideration’. NSW is facing the worst housing shortage in the country with projected shortfalls of up to 155,700 dwellings by 2020 according to the Housing Industry Association. Those statistics are serious food for thought when it comes to purchasing another property in NSW!
Another part of the REINSW proposal is the recommendation that the government give stamp duty concessions to those over 65 to make it easier to downsize their homes. This also may help free up dwellings to accommodate larger families. Introducing further concessions for home buyers will ultimately increase government revenue as markets improve and more transactions occur. Measures need to be taken to support home buyers and the housing market, as first home owners find the Australian Dream increasingly difficult to make a reality.
What do you think of the REINSW’s proposal to the State Government?
For further information on REINSW’s budget proposals, click here.