Read my lips .... another tax on NSW real estate

NSW property transfers will become liable to another new tax from 1 July 2010.

The new tax, levied on buyers applies on the sale of residential and commercial property worth over $500,000 at 0.2% up to $1 million and 0.25% over $1 million. 

The tax will cost property buyers an estimated $90 million annually.

Buying the median Sydney house at $600,000 means you’ll pay $200.  Buying a Sydney house for $1.2 million (which ain’t hard) means you’ll pay $1500. And, if you are lucky enough to be buying a $2.5 million dollar property then it is $5,750.  And, that’s on top of stamp duty of $22,500, $51,490 or $122,990  on each of those properties.

If you treat the new tax as quasi stamp duty, then it’s about a 4.5% increase in stamp duty affecting at least 40, 000 transfer each year.  According to NSW Department of Lands figures almost 30,000 residential and commercial property sales of between $500,000 and $1 million occured in the last 12 months and more than 10,000 properties sold for more than $1 million).

But, the government seems to suggest it is to fund new security measures for land transfer documents ….   Really ?  At, $90 million per year and going up ?

To me the new tax contradicts the recommendations in the recently published Henry tax review, which criticised transfer duties as unfair, affecting different people harder than others, causing economic distortions and reducing business activity.

It also just continues to make NSW less attractive to property investors.

And, it makes it tougher for operators and consumers in the property development, ownership and management sector.  All just when we need that sector to start taking off again.

Francesco …