The Victorian government is proposing an 18% increase in stamp duty and an increase in land tax, and a new tax for property developers.
The plan is to raise $2.4 billion over the next four years to support Victoria’s economic recovery.
What are the proposed changes?
| Tax | What changed? | How much revenue will be generated? |
|---|---|---|
| Stamp duty | An 18.2% increase in stamp duty from 5.5% to 6.5% for property valued above $2 million. | Raise over $761 million over the next four years from July 2021 |
| Land tax | A 19% increase on land tax for properties valued between $1.8 million and $3 million from 1.3% to 1.55%. For properties valued at more than $3 million, the land tax will increase from 2.25% to 2.55%. |
Raise $1.5 billion over four years starting from January 2022 |
| Windfall gains tax | This is a new tax for property developers with a tax of up to 50% windfall gains for rezoned land valued at more than $500,000. | Raise $124 million over four years from July 2022 |
The proposed changes are not set in stone. The final decision will be announced on the 2021-22 Victoria State Budget on 20 May 2021.
The announcement by Treasurer Tim Pallas was not received well, especially when other states like NSW are planning to remove stamp duty or replace it with alternative options.
Sydney suburbs that are hard to get into
When demand is at record highs with low property listings, data reveals that these suburbs in Sydney are where people stay the longest in their homes.
| Sydney suburb | How long do people live in their homes? |
|---|---|
| Bardwell Valley | 23.39 years |
| Homebush | 22.48 years |
| St Johns Park | 20.69 years |
| Abbotsbury | 20 years |
| Westmead | 20 years |
These suburbs experience only a handful of sales and are family-friendly areas with tight-knit communities.
Only 16 homes were sold over the past year in Bardwell Valley.
On the other hand, suburbs like Oran Park, Marsden Park and Gregory Hills are easy to get into, with an average hold period of 3 years.
This is a good example of supply issues impacting property prices.
If only 16 homes are selling in a suburb per year, there will be a huge fight for homes when they come up, which will impact prices.
Are you thinking of buying a property before the stamp duty comes into effect in Victoria or looking for the right suburb to buy in Sydney?
Our mortgage brokers can help you get a home loan approved to buy in Sydney or Melbourne.
Call us on 1300 889 743 or enquire online today.