What could this mean for you?

I have no plans to buy a property

No impact.

These proposed changes would provide greater choice for those looking to purchase a property in the future. Should this reform go ahead, unless you are buying a property, there would be no change. Owners who have already paid stamp duty would not be subject to an annual property tax. There would be no double tax.

 

Retirees

Li and Wen are happily retired. They purchased their family home 26 years ago and are not looking to move or buy in the future. The proposed changes would not impact Li and Wen as they have no plans to buy. They paid stamp duty when they purchased their home and there would be no double tax.

 

 

Young family

The Smith family purchased their forever home last year. The proposed changes would not impact the Smiths as they have no plans to buy again in the future. The Smiths paid stamp duty when they purchased their home and there would be no double tax.

 

 

 

I am planning to buy my first home

Help to enter the housing market.

Under the proposed changes, eligible first home buyers could have access to a $25,000 grant and the choice to pay a once-off stamp duty or an annual property tax.

 

First home buyers

Amanda and Tim are looking to buy their first home. They have a budget of $750,000 and will upgrade to a larger home in the coming years as their family grows. When buying their new home, they would be able to choose to pay the once-off stamp duty or the proposed annual property tax. As eligible first home buyers, they could also receive a $25,000 grant to spend as they wish.

 

	2021 First home $750,000	Total tax over 10 years	After $25,000 grant (savings)
Stamp duty or	$29,085	$29,085	-$4,085
Property tax	Starting at $1,243 p/a	$14,780*	+$10,220

Total savings over 10 years by choosing the property tax; +$14,305

 

To provide flexibility to move as their family grows, Amanda and Tim choose to pay the annual property tax instead of stamp duty, and save $14,305 over 10 years.

 

* An (illustrative) estimated growth rate of 3.8% per year has been applied to the property tax payment.

 

I am planning to buy my next home

Choice to suit your lifestyle.

If you are looking to purchase your new home, you would be given the choice to pay either an upfront stamp duty or an annual property tax. By choosing the option that suits your lifestyle and plans for the future, you would have the potential to save money and have greater flexibility.

 

Mobile family

Gaurav and Amrita want flexibility to live in the area and house they need as life changes and job opportunities emerge. Amrita is a teacher and is regularly posted to new regions so the family expects to move home every three years.

 

 

 

	2021 House 1 $600,000	2024 House 2 $700,000	2027 House 3 $800,000	Total tax
Stamp duty or	$22,335	$26,835	$31,335	$80,505
Property tax	$1,510 p/a* $4,530 over 3 years	$1,675 p/a* $5,025 over 3 years	Starting at $1,796 p/a	$11,351

Total savings over 7 years; $69,154

 

Gaurav and Amrita choose to pay the annual property tax and save $69,154 over seven years under the proposed new scheme.​

 

* Shown as the average annual payment over the three year period.

 

Empty nester

After many years in the city raising her children, Sue has recently retired and is planning a sea change. She is looking for her ‘forever home’, which she expects to enjoy for the next 20 years.

 

 

 

	2021 'Forever home' $700,000	Total tax over 20 years
Stamp duty or	$26,835	$26,835
Property tax	Starting at $1,865 p/a	$54,398*

 Difference over 20 years; $27,563

 

As Sue is planning to stay in the same home for the next 20 years, she decides to pay the once-off stamp duty and save $27,563 over this time​.

 

* An (illustrative) estimated growth rate of 3.8% per year has been applied to the property tax payment.

 

I am renting

No rental impact and potential to help enter the housing market.

This proposed tax reform would not have an impact on renters.

 

Happy renters

Jonathan and Cara are happily renting. This proposed property tax reform would not impact them.

Should the Government implement this reform, they could also be confident about the effect of the proposed property tax on rental prices as the Government would take measures to protect tenants from any short-run changes arising from the property tax. This could include proactive monitoring of the rental market, or legislation governing the pass-through of the property tax to residential or commercial tenants.

 

I am planning to buy a residential investment property 

Potential savings for investors.

Residential investors would have the choice to pay stamp duty and land tax or an annual property tax when they purchase an investment property.

Property tax would combine stamp duty and land tax into one. If you are a residential investor, you would pay a higher rate of property tax than owner-occupiers. The amount you would pay would be based on individual properties, not aggregate landholdings.

 

Working investors

Michelle and Rob are looking to buy their second residential investment property. They plan to sell after 10 years and use the profits to fund further investment properties. As residential investors, Michelle and Rob would have the choice to pay stamp duty and land tax, or the proposed property tax.

 

 

	2021 Investment property $800,000	Total State tax over 10 years (excludes income tax)
Stamp duty and land tax or	$31,335 + Starting at $5,920 p/a	[$31,335 + $70,420*] = $101,755
Property tax	Starting at $7,020 p/a	$83,505*

Total savings over 10 years; $18,250

 

Michelle and Rob choose to pay the annual property tax and save $18,250 over 10 years under the proposed changes.​ They would also benefit from deducting property tax from their income tax.

 

* An (illustrative) estimated growth rate of 3.8% per year has been applied to the property tax and land tax payments.

 

I am planning to buy a commercial property

Opportunities to expand your business when you need to.

Under the proposed changes, if you are looking to purchase a commercial property, you could choose to pay stamp duty and land tax or an annual property tax. The annual property tax combines stamp duty and land tax into one. Commercial property owners would pay a higher rate of property tax than owner-occupiers.

If you are a business owner, the proposed annual property tax could provide opportunities to grow your business with the freedom to move and expand more frequently. You may also be able to benefit from higher income tax deductions.

 

Business owner

After 10 years leasing a small property, Steve is purchasing a warehouse to expand his business. If his business continues to grow at its current rate, he will need to move to an even larger facility in five years. ​Steve could benefit from higher income tax deductions under an annual property tax.

 

 

	2021 Warehouse $2.25 million	Total tax over 5 years
Stamp duty and land tax or	$108,755 + Starting at $9,356 p/a	[$108,755 + $50,473*] = $159,228
Property tax	Starting at $34,125 p/a	$147,349*

Total savings over 5 years; $11,879**

 

To provide the flexibility to move as his business expands, Steve chooses to pay the annual property tax and save $11,879 over five years.

 

* An (illustrative) estimated growth rate of 3.8% per year has been applied to the property tax and land tax payments.

** An estimated potential benefit from income tax deductions has been incorporated into the calculation.