triSearch remain skeptical over plans for the NSW Government’s proposed Property Tax until further details come to light.
The proposed changes to the NSW property tax system aim to give people the choice to pay an annual property tax rather than stamp duty and land tax (where applicable).
If implemented, the proposed changes could give buyers the freedom to choose between paying stamp duty upfront or paying a much smaller annual property tax, when they buy their next home.
The property tax would consist of a fixed amount plus a rate applied to the unimproved land value of an individual property. This is broadly in line with the approach to council rates. A surcharge would be applied to high-value property portfolios.
Residential owner occupied and primary production properties would pay lower rates than investment properties, which in turn would pay lower rates than commercial properties.
While Taylah Allen, triSearch CEO, has welcomed the additional tax choice for buyers, she said there still needs to be more clarity on long-term effects for the proposed reform.
“In the short-term the reform appears it will encourage growth to first home buyers and younger generations to invest in the property market,” Allen said.
“However, our priority is the longevity of the real estate industry and its stakeholders. We caution whether increasing land values or future governments raising the tax rate to absorbent amounts year-on-year, is going to place more financial burden on home buyers in the long-term.
“This was explored earlier this year in the Consultation Paper. We support its recommendation to cap the annual property tax revenue target in line with appropriate measures.”
According to the NSW Government, removing the upfront cost of stamp duty could remove tens of thousands of dollars from the home purchase process and make it easier for first home buyers, families looking to upgrade and others looking to change their property to save what is needed to purchase their next home.
Recently named NSW Government Premier, Dominic Perrottet told press earlier this month that the state is facing “a challenge when it comes to generational equity where many young people today cannot get the keys to their very first home”.
“We have a duty to ensure that generations that come after us have greater opportunity and prosperity than we have.”
“We are proposing a once-in-a-generation reform to make home ownership more affordable and achievable. Making changes to the property tax system is highly complex, and we want to make sure we get this right,” Perrottet added.
The proposed property tax would replace both stamp duty and land tax. To reflect this, commercial property owners would pay a higher property tax rate than residential owner-occupiers.
For Conveyancing business owners, according to the state government, this proposed property tax could provide opportunities to grow your business with the freedom to move and expand more frequently. You may also be able to benefit from higher income tax deductions.
Allen believes that to ensure the future of the current booming property market in Australia, external plans, like the proposed tax reform, need to exist.
She said: “Our industry, whether it be conveyancers, real estate agents or tech firms like triSearch, are all benefiting from the booming real estate industry. For this to continue the industry will need help from external factors like potential property tax reform and other initiatives.”
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