First-home buyers have a difficult time accessing the market and, to ease the burden, the NSW Government recently passed legislation that allows FHBs to avoid stamp duty by paying, instead, an annual fee of $400 plus 0.3% of the land value.
This has been met with mixed reactions from the Opposition, who have branded the annual tax a ‘forever tax’ on the family home.
Stamp duty is a significant roadblock for buyers, with research showing that for an average house in Victoria valued at $824,500, $44,540 stamp duty is payable upon purchase – half an average Victorian’s annual income.
Figures showed that, on average, in Queensland, each home buyer paid $13,516 in stamp duty over the past six months. In NSW, it was $29,031, and in Victoria, customers paid $38,761.
It is argued that having an annual land tax rather than stamp duty could help remove a significant upfront barrier and help more aspiring home-owners acquire properties that meet their lifestyle needs.
As lifestyles have become more mobile, with Australians changing jobs more frequently, accommodating increased consumer mobility is important. The average young Australian will change jobs 12 times in their career, with an average tenure of just 3.3 years.
But an annual land tax may not be the panacea of all property tax problems. Critics of the scheme say an indexed land tax could end up costing families more — especially if they stay in their home for a long time.
