When purchasing a property in Australia one of the major costs that buyers and investors will need to budget for is stamp duty costs. The cost of stamp duty differs from state to state and a property in NSW costing $500,000 would incur a stamp duty of approximately $18,000, whilst in VIC stamp duty is nearly $22,000. The only exception to this is if you are a first home buyer purchasing a new home and you are eligible for the stamp duty savings.
Over the past 20 years, stamp duty has increased by 749 per cent, and is thought by some to be one of the worst taxes in Australia. The Property Council of Australia believes that Australia’s taxation system needs to be revamped and stamp duty should be axed.
In 1995, the average stamp duty cost was $4,685 which is much lower than today’s average of $35,090 based on the median house price of $880,000 in Sydney.
According to new analysis from the Property Council, average stamp duty costs have increased by between 527 per cent and 795 per cent across Australia’s states and territories in just 20 years. Unsurprisingly, the state with the highest stamp duty is Sydney where the stamp duty costs over an average mortgage’s lifetime is $61,542. Melbourne takes second place with stamp duty costs of $56,616, followed by Darwin $49,701.
Even though there have been many debates about the effects of negative gearing and whether that should stay or be abolished, the Property Council would prefer for negative gearing to remain allowing the average Australian to invest and save for their retirement.
“Negative gearing is nothing more than the ability to deduct legitimate expenses against income … The ability to gear and use debt for all asset classes is a crucial part of investing and fostering economic growth,’’ it argues in its submission to the tax reform discussion paper.
However, the council believes that stamp duty costs are the main culprit of making housing less affordable across the country and according to Property Council chief Ken Morrison, “Stamp duty has to go, it is our worst, most inefficient tax”. He also suggests that, “Getting rid of stamp duty needs to be a top priority of national tax reform and every government in the country.’’
In spite of this, the council understands the need that states and territories would need to find an alternate source of revenue and the most logical option would be to broaden the base of the GST and/or the rate.
REINSW also backs the abolition of stamp duty, and according to REINSW President Malcolm Gunning, “bracket creep is a major issue in NSW. Due to increases in property prices, home ownership is being taxed at levels higher than they were ever intended.”
He also says, “Stamp duty was never designed to slug the average property owner at such outrageous levels. It is time for the nonsense to stop. It is time for stamp duty rates to reflect the increases in the housing prices and it is time to give first home buyers a fair go”.
How much stamp duty will you have to pay?
Depending on the type of property you buy, the purchase price and location, this will affect the overall amount of stamp duty you will have to pay.
To work out stamp duty costs in your state, the easiest way to do this is to use a Stamp Duty Calculator. It is important to find this out before buying a property as this will give you an indication of how much extra money you will need to purchase a property.
Work out your Stamp Duty for your next property by using our iBuyNew Stamp Duty Calculator
Published on 19th of April 2016 by Marty Stanowich