KPMG responds to NSW State Budget stamp duty changes | KPMG | AU

KPMG responds to NSW State Budget stamp duty changes

KPMG responds to NSW State Budget stamp duty changes

Gary Chiert, KPMG Indirect Tax Partner, on the housing affordability/stamp duty changes in the NSW State Budget.

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“NSW is following Victoria which recently announced similar changes for first home buyers – and there is no evidence it is cooling the market in Victoria. In fact it could add fuel to the lower end.

Abolition of lenders mortgage insurance duty is a welcome step towards ultimate abolition of all insurance duty – but LMI generally targets low deposit borrowers and this seems inconsistent with APRA calls for banks to increase required equity.

Duties and land taxes on foreign land buyers is good politics but not necessarily good policy.

Exempting foreign developers is a very welcome move although:

  • the exemption is narrower than expected – the developer has to sell the developed home within 5 years of its purchase of the land. The intention is presumably to pressure developers to sell quickly rather than leasing, so that they don’t accumulate housing stock with a view to getting a higher price;
  • the Victorian experience is that developers trying to add to the housing stock are still being hit and incurring costs and delays in accessing the exemptions – and adding more bureaucracy to a process where FIRB approvals are already in place to protect Australian interest. It is to be hoped there will be some streamlining in the NSW process possibly linked to FIRB approvals.

Another welcome move is an intention to retrospectively clarify which commercial residential premises are exempt from surcharge duty and surcharge land tax. It is hoped that the exemption will extend to student accommodation.

The increased foreign surcharges will make NSW the highest taxed State for foreign investors in residential property. The crown for the highest tax previously went to Victoria, with a 7 percent duty surcharge (on top of the usual 5.5 percent rate) and 1.5 percent land tax surcharge. In NSW the effective tax rate for foreign investors will now be 13.5 percent duty (5.5 percent plus 8 percent surcharge) and a land tax surcharge of 2 percent.”

For more information

Ian Welch
Senior Communications Manager
T: 0400 818 891
E: iwelch@kpmg.com.au

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