The New South Wales (NSW) government announced plans to index the stamp tax (duty) brackets to the consumer price index (CPI) for residential property transactions.
NSW would be the first state or territory in Australia to make this type of change. Currently, the measure is seen as being relatively modest because of the current low rate of inflation, and therefore a low rate of indexation. The proposal also does not address “bracket creep” for transactions involving commercial real estate or land.
Currently in NSW, stamp tax (duty) is paid on the dutiable value of the property across seven brackets, ranging from 1.5% on a value less than $14,000* up to 7% for a property value exceeding $3 million.
The rise in housing prices has meant purchasers are paying significantly more in stamp tax now than they were in 2002, with the average rate of tax being paid increasing from 3.3% to 4.05% over the last 15 years. According to the NSW government, if the stamp tax (duty) had been indexed to CPI in 2002, purchasers of a $500,000 house today would be paying approximately $2,000 less.
The reforms to NSW stamp tax (duty) are to be effective for transactions on or after 1 July 2019.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.