WA leads nation with stamp duty freebie

Posted on 13/05/2007  
The Western Australia State government has tackled affordability head-on in this week’s State Budget, by effectively abolishing stamp duty for first home buyers.

 

The change means 90% of first home buyers in WA will pay no stamp duty at all, as the government has lifted the threshold above the median house price ($470,000). First home buyers could save $13,000 on a home purchased for $350,000 while those buying at the $500,000 threshold would save $20,000.

First home buyers have been virtually locked out of the Perth housing market for a year, as the median price increased by more than 40%. Of course, it could be argued that absolving first home owners from paying stamp duty does not alter the fact that Perth house prices are still the second highest in the country.

Real Estate Institute of Western Australia president Rob Druitt says the government’s decision to lift the stamp duty threshold for first home buyers to $500,000 is “fantastic news” but would disappoint existing homeowners who were looking to upgrade.
“The schedule for stamp duty rates for ordinary home buyers has not been adjusted for 25 years," he says. "As a result, upgraders are hugely overtaxed through exceptional bracket creep.”

He explained that if there was another 8% increase in the median house price in WA, more than half of all Perth house sales would be pushed into the top (stamp duty) tax threshold. “This is the sting in the tail of an otherwise excellent budget,” Druitt says.


The WA Government also attacked land tax, lifting the exemption threshold from $100,000 to $250,000. The REIWA says this will ease cost pressures on owners and lessen the risk of future rental increases. WA Property Council chief Joe Lenzo says the land tax reforms meant that WA would have the lowest land tax rate in Australia across most property valuations. Lenzo says the stamp duty and land tax reforms were “long overdue”.

Victoria and New South Wales are now well behind WA and Queensland in their stamp duty policies for first home buyers. In Victoria, stamp duty of $19,120 would be levied on a $391,000 (median priced) home and New South Wales buyers would pay $19,052 stamp duty on a median priced home ($523,600). Most WA buyers will now pay nothing, while in Queensland the duty payable on a median priced home ($339,500), is $4382.

Under pressure from lobby groups, the Queensland Government has been gradually phasing down stamp duty imposts. In its 2006 Budget, the Queensland Government abolished stamp duty on a first home valued up to $320,000 and there are expectations of further reforms when the 2007 Budget is brought down on June 5.

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