The NSW government has announced a property tax option for first home buyers who prefer to not pay stamp duty in the state budget handed down today.
The multi-billion dollar housing package, the First Home Buyer Choice, involves a property tax of $400 plus 0.3% of land value paid annually.
The option is available for properties worth up to $1.5 million, with the government estimating this, alongside existing initiatives, would mean 55,000 people a year will be supported in purchasing their first property.
Home ownership is a priority for the state government, according to NSW premier Dominic Perrottet.
“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers,” the premier said.
“We want to lower the barriers to owning a home for first home buyers seeking a place of their own.”
The premier has stated his opposition to stamp duty, describing it as the ‘worst tax’.
“We cannot abolish stamp duty in NSW without support from the federal government,” Perrottet said.
Replacing stamp duty with a land tax was previously advocated for by the Grattan Institute in its ‘orange book’ series – its take on the red and blue books prepared by public servants for incoming governments.
NSW treasurer Matt Kean said $728.6 million had been allocated by the government over the next four years to assist first home buyers.
“This government will use every lever at its disposal – including tax, planning, supply or working with the Commonwealth — to give more people in NSW the opportunity to own their own home,” Kean added.
The government has said it plans to introduce the legislation to enact the property tax in the latter half of the year, with buyers able to apply from 16 January 2023.
NSW shadow treasurer Daniel Mookhey has been critical of the scheme.
“Mr Perrottet doesn’t have a mandate to introduce an annual tax on the family home that lasts forever,” Mookhey said. “He needs to cancel any further progress on this proposal.”