The NSW state government has abolished stamp duty for first home buyers purchasing new homes under $800,000, a move which has been welcomed by Aussie.
Premier Gladys Berejiklian announced on Monday (27 July) that the state government will temporarily axe stamp duty for first home buyers purchasing newly built homes (valued at under $800,000) from 1 August.
There will also be concessions available for new homes under $1 million in value (up from the previous limit of $800,000).
Previously, stamp duty applied to first home buyers that purchased homes worth more than $650,000.
The move is expected to support approximately 6,000 first home buyers while boosting construction and creating jobs amid the COVID-19 crisis.
As well as increasing the stamp duty threshold for newly built homes, the government will also raise the threshold for stamp duty on vacant land.
This will rise from $350,000 to $400,000 and will phase out at $500,000.
The temporary changes will only last for a period of 12 months and will only apply to first home buyers purchasing newly built homes and vacant land, not to existing homes.
“Thousands of people will see their bank balances benefit from this change. It will help get more keys into more front doors of more new homes,” Ms Berejiklian said.
“It will also boost housing construction across NSW and support jobs in the building industry at a time when we need them more than ever before.”
NSW treasurer Dom Perrottet added: “The current scheme has already helped over 93,000 first home buyers since July 2017 and this will give the construction industry extra support as we face the challenges of COVID-19.
“We need to ensure our building sites keep ringing with hammers and saws as that means more people working, and first home owners will save money in the process.”
The NSW government will also continue to offer a $10,000 First Home Owner Grant, which is available to people buying a new first home worth no more than $600,000, or buying land and building a new first home worth no more than $750,000 in total.
This means the maximum amount of benefit a home owner could be entitled to is $32,335 if purchasing a new home and accessing the grant.
The move compliments the intentions of the federal HomeBuilder scheme that provides a $25,000 grant to owner-occupiers “substantially renovating” or building a new home between 4 June to 31 December 2020.
The federal government estimates that approximately 27,000 grants would be handed out as part of the package across $10 billion in building projects, supporting 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector.
Aussie CEO welcomes stamp duty relief extension
Speaking of the new announcement, the CEO of major brokerage Aussie, James Symond, welcomed the extension of FHB stamp duty relief in NSW.
Aussie CEO James Symond commented: “We welcome the NSW Government’s decision to temporarily pause stamp duty on new home builds, as this will provide a lifeline for aspiring first home buyers during this critical time.
“Important initiatives like this will have positive outcomes for so many hopeful first home buyers, the housing and construction industry, and the entire NSW economy,” Mr Symond said.
“While the stamp duty relief is temporary and only available for the next 12 months, it’s important for first home buyers considering purchasing a new home to understand their financing options and the range of conditions that apply,” he added, noting that FHBs looking to purchase property would benefit from using a mortgage broker.
Aussie recently reported that is has seen an influx of inquiries from first home buyers and customers seeking to take advantage of both the grants and the lower rates now being rolled out by lenders, but are confused by the various grants available to them.
“A decision to see a broker could save first home buyers time and money as both state and federal governments seek to provide valuable support during this time,” Mr Symond said.
NSW government land tax debate heats up
The NSW government’s stamp duty announcement comes hot on the heels of the release of the state’s draft Federal Financial Relations Review.
The review, undertaken by an “independent expert review panel” appointed last year by the NSW state treasurer, sets out a roadmap to realign financial relations between the Commonwealth and the states.
The Supporting the road to recovery draft report, suggests that the state governments should be given more control over tax decisions, warning that the benefits of federalism are being undermined in Australia by duplication, bureaucracy and creeping centralisation, which it suggests has fostered “a learned financial dependency among the states”.
The report therefore advocates changing Australia’s tax mix to give states more control over their income, make taxes “as simple as possible”, and to limit the impact they have on citizens’ lives, such as the decision about when to move house and whether to take out insurance. Notably, this would include the replacement of stamp duties on property transfers and insurance taxes, with a broad-based land tax (with an “appropriate transition process that recognises the impact on property owners”).
According to the report, the 15 recommendations put forward would have the effect of making state revenues more stable and sustainable and give them more control over revenue raising and spending on essential services such as health and transport
The draft recommendations are open for consultation until 31 July, with a final report expected to be delivered in September 2020.