This Is How The Proposed Stamp Duty Can Affect NSW Home Buyers
For over a hundred years, the stamp duty remains unchanged, which makes it outdated. Thus, policymakers in NWS are planning to change this system in a bid to stimulate economic activity stemming from the housing sector.
But exactly how this proposed plan can actually impact future home buyers? To put it simply, its impact is significant.
Fueling economic growth
The proponents of the proposed system believed that by changing the stamp duty levied on properties in the state, productivity and economic activity would increase in NSW. This is because home buyers can avoid paying for the 4 percent stamp duty on their newly purchased properties.
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Also, forecasters believe that the stamp duty discourages seniors from selling off their properties and thereby decreasing the number of properties listed.
But with the recent impact that the Covid-19 pandemic had on the global economy, economists saw how volatile stamp duty is. With increased restrictions imposed countrywide due to massive lockdown, property sales plummeted at an alltime high.
With this, the government saw the need for reform, which is good for both the government and home buyers. Too much reliance on stamp duty was seen unsustainable in a volatile economic condition, hence the need for reform.
Should the proposed system get its approval anytime this year, the NSW government is basically making payment for existing land tax optional for both commercial and residential properties.
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Instead of totally amending the tax law, the NSW government has opted for the optional route to give its citizens the option to choose whether to opt for paying the property tax or the stamp duty.
Issues on sustainability
While the whole point of the proposed scheme is commendable, observers claim that the optional system can be troublesome for the government in the long run.
Critics believe that considering the optional nature of the proposed system, it begs the question of what will happen should most of the property owners choose to pay for the property tax? This would mean less income for the NSW government in the long run.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today!