NSW’s changes to stamp duty – Will Victoria follow suit?

Aug 8, 2022

The NSW Government recently introduced changes to its stamp duty regime which allows first home buyers to choose whether to pay stamp duty or pay (on an indefinite basis) an annual land tax at a rate of $400 per year plus 0.3% of the land value. That’s right, indefinitely! So a purchaser could end up paying more in the end by electing to make the annual land tax payment.

However (and interestingly), if a purchaser who has opted to pay the annual land tax sells the property quickly (say within a few years), then there is no obligation on them to pay a top up amount towards the stamp duty amount that would have been payable if the purchaser has elected to pay the full stamp duty upon purchasing of the property. Also,  the land tax liability will not run with the land upon a subsequent sale – it is wiped from the property.

These changes are due to take effect in NSW from 16 January 2023 and there have been calls for Victoria to enact similar laws.

Although the intent is to assist first home buyers to enter the property market more quickly, the fear is that it will just push property prices up even more (with purchasers now able to apply funds saved on account of stamp duty towards the purchase price).

It’s a real worry. But for now, we just have to wait to see if Victoria will follow a similar reform.