Stamp Duty South Australia
I have always thought it strange that a first home owner is South Australia is given a $15,000 First Home Owner’s Grant when buying a new property only to then pay $13,870 in stamp duty on a purchase of $350,000 value and a transfer fee of $2,375 on top of that. Truly, if ever there was one, a case of “What the one hand giveth, the other taketh away”. Think of the money wasted in administering this money merry-go-round.
I also wondered why the stamp duty on a previously-occupied property was not cancelled altogether for a first time buyer. The occupant of that previously-occupied property would then usually have to find another property to move into, normally at a higher price with a higher stamp duty going into the state’s coffers as a result.
This would surely start many chain reactions as the previous occupants of the second properties would usually then need to find somewhere else to live and once again stamp duty would end up in the state’s coffers once more. I can see the problem with letting first time buyers out of paying stamp duty on a new house as it would not be recouped by the vendor then having to buy another property, but not with previously occupied properties.
Then I wondered if I hadn’t missed something, if there wasn’t some blatantly obvious reason why this wasn’t happening. Well, it seems there wasn’t any good reason. Now I have read that Western Australia and the Northern Territory recently cut stamp duty costs which saw a spike in Government revenues due to a marked increase in housing transactions. Western Australia witnessed an increase of over $709,000,000 in extra revenue over three years when transfer duty was decreased between 2003 and 2006.
Recently David Airey, President of the Real Estate Institute of Western Australia (REIWA), said that the current stamp duty exemptions have been effective in keeping first home buyers in the market. New South Wales recently scrapped its tax concessions for first home buyers and first home buyer’s share of house purchases has since collapsed and does not look like recovering. The same thing happened in Victoria apparently.
It seems obvious that the reduction or removal of stamp duty has a dramatic influence on housing transactions, with the increase in activity also leading to significantly increased government revenues. There may be contributory factors involved especially in the case of the Northern Territory where prices are still recovering but that is happening very quickly with an overall increase in prices of over 10% from December 2011 to December 2012. The question to be asked is why has South Australia not followed suit?