Did NSW & Vic Treasurers just kill the property markets?

New annual property tax

Fixed fee -$500 + 0.3% annual tax on unimproved land value

I assume this the same for both owner occupied houses and investment properties

it would not be good if there is a higher rate for IP

I assume this does not replace land tax so unfortunately still have to pay that

but good news for flippers - quick in and out - now with a bigger profit margin

 

Other information | NSW Treasury

OO resi $500 + 0.3% of unimproved land value
IP resi $1,500 + 1.0% of unimproved land value

Taking a 650k'ish house that has land value of 375k, annual tax would be $5,250.

Compared to full stamp of about 25k.

 

I didnt know the rates had been announced, although that sounds rather cheap (pleasantly so).
Most people would pay three times that in super fees without a second thought.
I read in another threat the OO rate is less than the IP rate.

 

I just saw that rate on the nightly news

 

that’s terrible for property investors - is land tax on top of this ?

 

it looks like this new property tax replaces both stamp duty and land tax

this is from the nsw treasury website -

“If implemented, these proposed changes could give property buyers the freedom to choose either to pay stamp duty and land tax (where applicable) or to pay an annual property tax.”

did I read this correctly?

Also - it looks like these rates have not been finalised as yet and is open to review for the next couple of months

 

If you are a seller with a property on the market at the moment, it's probably not going to sell for a long while.

Announcing it today without a firm timeline will stall the property market. So in a way I think the answer to the OP's question is a yes.

Who in their right mind would decide to pay stamp duty, possibly months before implementation of a new tax system where you could save tens of thousands?

 

If you are planning to buy as an investment property anyway and would choose to pay stamp duty anyway (because you plan to hold for the long term), it might make sense, especially if the market stalls and you can buy a little cheaper.

 

That is two IF's in a row.. it's still no incentive to buy now as opposed to when the changes are implemented.

I've so far spent 5K on listing on RE/Domain websites, 4K in styling my place, and 8K down in rents not collected. I'm 99% certain that I've just lost 17K and counting.

 

If you plan to hold less than 5 years, you benefit, more than 5 years, with tax possibly pegged to CPI you're worse off.

Though, if this property tax is tax deductible on IP, then you are able to claim your Stamps back over 5 years, which isn't so bad I guess.

 

I don't understand how this was worked out. The property tax on the example house would be 1,625 per year based on the rates you provided. It would take ~15 years to break even.

 

Assuming it was IP. For IP it's more complicated because the property tax seems to replace land tax, but the value depends on whether you are paying it or not (property tax doesn't seem to have a threshold).

But the breakeven will be shorter even for PPOR at $1,625. Because the unimproved land value is likely to rise.

 

It is different for the owner occupied houses and investment properties. Check this out.
Other information | NSW Treasury

 

I'm taking my CBD apartment off the market. It's been a tough campaign, but with this new tax disproportionately affecting apartments (which inherently have lower land values), I expect demand to fall off a cliff. I suspect apartment values will increase and change hands more frequently once it's implemented.

 

I don’t believe those figures are real as at present we in NSW pay 2% annual land tax on property over the prescribed amount. I can’t imagine they are going to drop both the 2% land tax and the 5% purchase price stamp duty for a very small 1% of ucv. BTW the Feds aren’t going to like the increase in neg gearing caused by this new tax.