Significant savings to be had in a post stamp duty world

THE debate over stamp duty has been heating up over the past few weeks as industry leaders discuss how to stimulate Queensland’s property market in a post COVID -19 world.

Stamp duty, or land transfer duty, is the added tax you pay over and above the sale price of a property.

The amount you are required to pay varies from state to state and also depends on the type of property you buy, for example, if it will be your primary residence or an investment property; whether you are a first-home buyer; whether you’re purchasing a second-hand home, new-build or block of land; or whether you’re classified as a foreign buyer.

Either way, the tax is revenue for the government’s coffers and many industry experts believe it is stifling the market’s ability to prosper.

For instance, the average stamp duty paid on a house in Brisbane at the median property price of $543,000 is $10,285.

For apartments, the figure is $4,900 on a property at the median price of $390,000.

Not an insignificant amount, according to Cameron Kusher, executive manager of REA Group, who described stamp duty as an inefficient and inequitable tax that fell on the shoulders of 4 to 6 per cent of people who purchase a property in any given year.

“The significant cost of moving home imposed by stamp duty has far reaching, and in certain cases, longterm impacts,” he said.

“It impedes the mobility of our labour force, is passed on to tenants from landlords through higher asking rent prices, and presents a particular burden for families, retirees, lowincome earners and the unemployed, who need to upgrade or downgrade housing as their life circumstances change.

“While revenue from stamp duty is significant and pays for things such as roads and hospitals, it is an unreliable revenue stream and has proved to be quite volatile following the ups and downs of the property market.”

Antonia Mercorella, the chief executive of the Real Estate Institute of Queensland, said she was calling for immediate reform of the “antiquated tax”.

She said that state governments had become addicted to it as an important revenue stream, with up to 25 per cent of the state’s income raised through stamp duty.

“While we recognise it will mean a loss of that revenue, we need to consider the flow-on effects. When a family buys a house, it doesn’t just stop there, there is a flow-on effect to the local economy. They employ a renovator, they use the local shops,” Ms Mercorella said.

“There are still financial benefits to be had and reforming stamp duty is by far the most significant way in which we can boost the property market.”