NSW Stamp Duty Sleight of Hand

I posted about the new transfer tax in NSW commencing on 1 July 2010 a few weeks ago (see Read my Lips ... another tax on NSW real estate).

And, now Sean Nicholls reports in his article New Property Transfer Tax to Net More Homes in the Sydney Morning Herald that –

• it will be called the Torrens Assurance Levy
• the transfer tax will not be indexed so that as property prices rise more sales will be caught by the tax and caught at higher rates
• proceeds from the tax will be funnelled into consolidated revenue
• the tax is estimated to raise $96 million in FY 2011, $105 million in FY 2011, $110 million in FY 2011 and $118 million in FY 2014 (a total of $429 million in 4 years)

But, just as it’s taking more money on sale transaction the NSW government is giving it (and probably more) back in stamp duty exemptions.


From 1 July 2010 purchasers of new buildings and apartments will save from $5,623 to $22,490 in stamp duty.  At the highest exemption levels there is effectively no stamp duty on the purchase.

To qualify under the NSW Home Builders Bonus buyers must –

• buy a new (not previously occupied) or off the plan home or apartment
• the contract must be made between 1 July 2010 and 30 June 2012
• the price must be less than $600,000
• where the home or apartment is completed there is a 25% exemption
• where the home or apartment is off the plan the building, the construction has not commenced and it is completed within 2 years (either by 31 December 2012 or 31 december 2013 depending on which year the contract was made) then a full exemption is available

You can find out more about the Home Builders Bonus scheme here.

Clearly the scheme is designed to stimulate the first home owner buyers market (which has gone a bit flat recently) and the affordable apartment development sector.  And, it will probably work too.

But, like previous buyer incentive programmes most commentators think that the benefits will leak (at least partly) into price rises in that market sector.  Others suggest that two years is too short for major projects to go from laying foundations to completion and settlement.

Either way expect to see a lot of apartments for sale at $599,990 in the next 12 months.

See you at the Saturday display suite opens with your cheque book to get your government benefit.

Francesco …