Under proposed reforms set to receive funding in next week’s NSW budget, home buyers will be able to choose to pay an annual property tax rather than a stamp duty payment.
The changes would reduce upfront costs for buyers but add another bill to the household budget. While the lower annual tax would add up over the years, new Domain modelling shows that switching could leave some better off.
Domain chief of research and economics Dr Nicola Powell said it would take years for buyers to fork out property tax that would be comparable to stamp duty, making the tax a better option for those purchasing a home for the short to medium term.
An owner-occupier purchasing a $500,000 home would need to pay property tax for approximately 13 years before it matched the upfront cost of stamp duty, the modelling shows.
On a $1.5 million property, it could take 18 years to accrue the stamp duty equivalent in property tax if homeowners were to pay a proposed annual tax rate of $400, plus 0.3 per cent of the unimproved land value.
