Would you prefer to pay stamp duty upfront or an annual tax? New government proposal

The NSW government is seeking feedback from the public on a proposal to give property buyers a choice, at the time of buying a property, of either:

• paying stamp duty upfront (now called transfer duty); or

• instead, paying a smaller, annual property tax.

The government believes that removing the upfront burden of stamp duty will make the prospect of home ownership much more achievable for many people in New South Wales.

Under the proposal:

• land tax still payable: if a property buyer chooses to pay stamp duty upfront, the property buyer will still be liable to pay any existing annual land tax (if liable);

• subsequent owners liable: if a property buyer chooses to pay the annual property tax, any subsequent owners of the property will also be required to pay the annual property tax;

• no double taxation: if a property owner has already paid stamp duty, the property owner will not have to pay the annual property tax;

• property assessed individually: the annual property tax will comprise a fixed amount plus a variable rate on the unimproved land value of the individual property and not on aggregate landholdings (it will be similar to council rates);

• lower residential rates: the annual property tax rates for residential owner occupied properties will be lower than those for investment properties and commercial properties;

• grant for first home buyers: the existing first home buyer stamp duty exemptions and concessions will be replaced with a grant of up to $25,000; and

• no passing on to tenants: property owners will not be able to pass on the annual property tax to tenants (unless agreed by the tenants).

The proposal is open for public feedback until 15 March 2021. The government will then report its findings in mid-2021.

See the NSW Treasury website for more information.