NSW rakes in extra $5BILLION in tax from Sydney house price surge after ditching plan to dump fee
House prices surged astronomically in that time, with the buyer of a typical $1.4 million Sydney home paying $62,000 in stamp duty.
Premier Dominic Perrottet last year proposed to replace the hated fee with an annual land tax, but that plan has been dumped.
The Labor opposition also has no plan to ditch stamp duty if it wins power in the state election nine months from now.
The NSW Government collected $12.2 billion from land-related transfer duty in the 10 months to April 2022, according to Revenue NSW.
A Sydney suburban house is seen for sale. House prices rises have led to record stamp duty revenue for the NSW government
In the 2020-2021 financial year, $9.6 billion of land duty was collected, while in 2019-2020 stamp duty brought in $7.1 billion to the NSW coffers.
Even with house prices tapering off in recent weeks, and even falling in some suburbs, the state government is likely to have taken in $14 billion in stamp duty by the end of the 2021-2022 financial year on June 30.
Revenue collected from the duty already this financial year is 370 per cent higher than the $3.3 billion it raised in 2011-12, the first year of the Coalition’s three terms in power.
Monthly revenue from stamp duty surged during the Covid pandemic from a low of $450 million in May 2020 to a peak of $1.6 billion in October and December 2021.
The figure dropped to $976 million in April as house prices stabilised or fell.
The state government will hand down its budget on June 21, when it will also reveal more about NSW’s finances overall.
NSW Treasury said stamp duty revenue changes from month to month ‘due to a number of market, economic and other impacts including the global Covid-19 pandemic’.
Before he became premier last year, Dominic Perrottet, who was then the state treasurer, proposed giving new property owners the option of paying an annual land tax of at least $400 instead of an upfront stamp duty in the tens of thousands.
Under the land tax, the buyer of a typical $1.4 million Sydney house would have paid an annual bill of $2,400.
A signboard of a sold property in McMahons Point on May 5, 2022 in Sydney, Australia
He argued a land tax option would create 75,000 jobs and see 300,000 more people achieve home ownership.
But since that ‘progress paper’ was released in June last year, the Coalition failed to confirm whether this policy would even be implemented before the next election in March 2023.
The Labor opposition also made it clear it has no intention of replacing stamp duty with a land tax.
Shadow treasurer Daniel Mookhey told Daily Mail Australia that should Labor leader Chris Minns win the next election and become premier, stamp duty would be here to stay.
This means someone buying a typical Sydney house has to pay $62,000 upfront to the state government. Under the alternative, a land tax, the same buyer of a $1.4million house would be paying an annual bill of $2,400 (pictured is an auction at Hurlstone Park in Sydney’s inner west)
‘We are worried that Mr Perrottet’s proposal will lead to a forever tax on people’s forever homes,’ he said.
‘As inflation rises and rises, hard-working families will struggle to pay the premier’s land tax.
‘The average homeowner in NSW would have seen their land tax bill more than double in the past five years, if they were paying Mr Perrottet’s land tax.’
First home buyers can qualify for a stamp duty exemption for homes they buy for less than $650,000 while a concessional rate is available for properties worth up to $800,000.
The rule applies whether the home is brand new or existing.
Home buyers are set to continue paying hated stamp duty in Australia’s most populated state whoever wins the next election despite the hype (pictured is a unit block in Sydney)
First home buyers don’t pay stamp duty on land worth less than $350,000 with a concessional rate applying up to $450,000.
The last NSW Budget paper, released in June 2021, said existing stamp duty was stopping many younger people from buying a home.
‘Removing stamp duty, which is one of the principal barriers to home ownership, would lower the up-front cost of home purchases for all buyers,’ it said.
‘It would help to enhance household mobility, allowing more people to choose the right home for themselves and their families at every stage of life, without being penalised by stamp duty.’
Sydney postcodes near the harbour earn the state a lot of money from stamp duty when they are sold. Pictured is a house in Vaucluse in the Sydney’s eastern suburbs
But almost a year on from that ‘progress paper’ on replacing stamp duty, nothing has changed.
The real estate industry wants stamp duty axed, but Tim McKibbin, head of the Real Estate Institute of NSW said: ‘We don’t see much point in getting rid of stamp duty and replacing it with a property tax.’
Mr McKibbin told the Sydney Morning Herald that stamp duty inflated house prices and 40 per cent of the cost of new housing was taxes and charges from the three levels of government.