NSW Plans To Abolish Stamp Duty

Published by Otto Dargan on May 7, 2020
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We have a page on NSW stamp duty changes with information on stamp duty waiver for first home buyers, effective from 1 August 2020.

In order to revive the NSW economy that has been affected by the coronavirus pandemic, NSW’s Treasurer Dominic Perrottet has laid out plans to completely scrap off stamp duty and payroll tax.

If NSW does abolish stamp duty, then you could save up to 4% of the property costs when buying a home.

When will stamp duty be abolished?

Stamp duty was supposed to be abolished in all states when the GST (similar to VAT) was introduced in 2000. They just never got rid of it!

No date has been set on when the stamp duty reform will come into effect in NSW.

However, even before the coronavirus, many had argued that stamp duty was an ineffective tax.

Even the Prime Minister of Australia, Scott Morrison said, “Every economic analysis puts it at the top of their list of worst taxes. For every $1 raised it does about 80¢ of harm.”

Why do I need to pay stamp duty in NSW?

Stamp duty is an upfront tax home buyers will need to pay for purchasing a property.

Besides transferring the property to their name, it serves no financial benefit to the home owner, rather, it increases revenue state governments.

Stamp duty is one of the biggest revenue sources for state government, raising about $21 billion in 2017/18 according to HIA Stamp Duty Watch.

How much is the stamp duty in NSW?

In NSW, you will need to pay stamp duty when you’re buying:

  • Residential or investment property
  • Vacant land
  • Commercial or industrial properties
  • A business that includes land

If you were buying a property valued at $890,000 in Sydney, then you will need to pay $35,482 as stamp duty on property.

You can use our stamp duty calculator to find out how much stamp duty you might need to pay in each state in Australia.

Property Value Amount of stamp duty
$0 to $14,000 $1.25 for every $100 (the minimum is $10)
$14,001 to $30,000 $175 plus $1.50 for every $100 over $14,000
$30,001 to $81,000 $415 plus $1.75 for every $100 over $30,000
$81,001 to $304,000 $1,307 plus $3.50 for every $100 over $81,000
$304,001 to $1,013,000 $9,112 plus $4.50 for every $100 over $304,000
Over $1,013,000 $41,017 plus $5.50 for every $100 over $1,013,000

Is there stamp duty exemptions for first home buyers?

There is stamp duty exemption or concession for first home buyers in NSW and it operates under the First Home Buyer Assistance Scheme (FAS)

  • Stamp duty exemption for new and existing homes valued up to $650,000.
  • Stamp duty discounts available for homes valued between $650,000 and $800,000.

What is the effect of abolishing stamp duty?

An increase in land tax

If the stamp duty is abolished, the NSW government will get their revenue from other sources, and the most likely one is an increase in land tax.

Land tax is currently paid by investors based on the value of the land they own. The value of the building or the value of their home is excluded.

For example, if you own a house worth $1,000,000 as an investment and the land itself is worth $500,000, then duty is calculated only on $500,000 and not $1,000,000.

So, the NSW government could charge:

  • A flat annual land tax.
  • Give an option to either pay stamp duty upfront or annual land tax.

Housing could be affordable

Stamp duty is considered an inefficient tax as it impedes workforce mobility and disproportionally impacts vulnerable households.

Most home buyers rely on mortgages to purchase their homes.

Due to stamp duty, it reduces their purchasing power and forces them to borrow more. This adds to the mortgage repayments.

Therefore, if stamp duty is abolished, it could mean:

  • Housing would be more affordable.
  • The mortgage repayment amount would decrease.
  • Will other states also abolish stamp duty?

    As of right now, NSW Treasurer is working on abolishing stamp duty.

    Victoria’s Treasurer Tim Pallas is also working on getting rid of stamp duty, but the details have yet to be flushed out.

    On August 14 2020, Philip Lowe, governor of the Reserve Bank of Australia said that he is in support of removing stamp duty as part of a broader tax reform agenda.

    During his bi-annual address to the House of Representatives Standing Committee Economics, Governor Lowe explained that stamp duty is a tax on mobility and people moving locations.

    The Premiers of New South Wales and Victoria confirmed that stamp duty reform would be considered to rejuvenate the economy that has been hit by the COVID-19 pandemic.


    If stamp duty is abolished, this could mean that you won’t have to save a larger deposit to qualify for a home loan. You won’t have to rely on the banks to cover the cost of stamp duty for you.

    Low deposit home loans are also available, and the First Home Loan Deposit Scheme is available for first home buyers.

    Talk to our mortgage brokers today to see if you qualify for a home loan. Call us at 1300 889 743 or fill in our free assessment form.

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