The NSW Government Is Cutting Stamp Duty, But Will It Make Houses Cheaper?
The hammer falls, and then there's the sting of stamp duty. Most buyers get slugged tens of thousands of dollars for it.
The New South Wales Government has finally acknowledged there's a need for reform, and it's announced it'll effectively cut the tax by about $500.
It sounds pitiful, especially when buyers are forking out an average $1.2 million for a house in Sydney.
"Whilst today, the savings are in the hundreds, in the future they'll be in the thousands. And it'll make it a much fairer system" Premier Gladys Berejiklian announced on Monday.
It could be interpreted as an admission that the system has been ripping people off.
Stamp duty is calculated on brackets.
The more you spend on a home, the more you pay in stamp duty.
One problem, however, is the brackets haven't changed even though house prices have gone through the roof.
So most buyers fall into the top 3 tiers and get slugged at the highest rates.
Under the new reforms, the brackets will move in line with CPI.
"We're the first state in the country to do this reform. It should've been done back in 1986 when I was 4 years old" Treasurer Dominic Perrottet told 10 News First.
The Housing Industry Association wants stamp duty abolished.
"It distorts behaviour in the market. It is also an inequitable tax," said HIA Principal Economist Tim Reardon.
"The NSW government is the most heavily dependent state on stamp duty revenue... there are far more efficient taxes."
This year, the state government will collect $5.6 billion in stamp duty on residential sales. The reforms will only save buyers $185 million over 3 years.
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Steve Jacobsen rents in the inner west with his young family, and says the announcement won't help him buy a house.
"Not when house prices are $1.3 to $1.4 million dollars in an area that you're kind of interested in living," he said.
The opposition has declared it "a cheap election stunt by a dying government in its last days".
But the government insists this is just one in a host of housing reforms.