Things that make you go Hmmmm — NSW Stamp Duty

One of those things that make us all think Hmmm is NSW Stamp Duty. Par­tic­u­larly the duty that is levied on our res­id­en­tial property.

Our trans­fer of stamp duty is based upon a pro­gress­ive tax sys­tem where cheaper prop­er­ties incur a lower rate of tax and more expens­ive prop­er­ties incur a higher rate of tax.

Some Aus­trali­ans would say that this tax sys­tem is reas­on­ably fair. I will leave that dis­cus­sion for the com­ments bellow.

How­ever, as house prices con­tinue to rise, aver­age people that want to buy aver­age fam­ily home are being pushed into the higher tax­a­tion brack­ets that were ori­gin­ally designed to tax the very wealthy.

The com­mon phrase used to define this situ­ation is bracket creep.

The climb­ing value of prop­erty in NSW is cur­rently prov­ing to be a cash cow for the NSW gov­ern­ment as bracket creep kicks into high gear.

Here are some num­bers that will cre­ate plenty of Hmmmms all over NSW:

1. The aver­age amount of stamp duty paid by each res­id­en­tial prop­erty buyer over the 2012/13 fin­an­cial year was $20,647. Com­pare this to the aver­age in 2005/06 of just $14,471. An increase of $6,175 per prop­erty in 7 years. Hmmm.

2. The NSW gov­ern­ment pock­eted an addi­tional $577,580,193 in res­id­en­tial prop­erty stamp duty this fin­an­cial year com­pared to last fin­an­cial year. This is over half a bil­lion more than the year before. Hmmm.

3. 10% more prop­er­ties were sold in the 2012 — 2013 year com­pared to 2011 — 2012. How­ever, NSW stamp duty col­lec­tions grew by 17%. Hmmm.

2012 finacial year NSW Stamp Duty thresholds

2013 finacial year NSW Stamp Duty thresholds

Given the above, I think it is time for a review of the Stamp Duty thresholds.

As all of the eco­nom­ists keep telling us, the hous­ing industry (par­tic­u­larly in NSW) must pick up the slack being left behind by the decreas­ing min­ing boom. What bet­ter way to get things mov­ing than by tweak­ing this tax sys­tem to bet­ter suit the aver­age person.

About 

With expert­ise span­ning mort­gage lend­ing, prop­erty law, prop­erty invest­ment and bor­row­ing to invest within Self Man­aged Super­an­nu­ation, Aaron Sains­bury offers more than 25 years pro­fes­sional advis­ory expertise.

He is an enthu­si­astic sup­porter of fin­an­cial lit­er­acy, work­ing closely with cli­ents to help them gain and main­tain con­trol of their fin­an­cial future.

Aaron is thor­oughly com­mit­ted to build­ing lifelong rela­tion­ships with cli­ents based on the highest qual­ity ser­vice, advice and trust.

Con­tact Aaron dir­ect on 02 9818 8643 .

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