Originally slated to disappear all the way back in 2000 with the introduction of the GST
Originally slated to disappear all the way back in 2000 with the introduction of the GST, stamp duty is one of those taxes that virtually everyone encounters somewhere through their lives – whether it be on a vehicle purchase, buying a home or investment or even something as innocuous as taking out insurance.
An upfront bill that can cost tens of thousands of dollars (or even more) depending on the purchase price, stamp duty on property purchases in QLD is subject to 2 main concessions. 1. A reduction in the cost for the purchase of a principal place of residence (a home) versus the purchase of an investment. And 2. The first home buyer stamp duty concession. Those that invest in property unfortunately cop the full fee.
While we can argue about the inefficiency of a tax like this for any length of time (and look out for this to be covered more fully in future columns), today we will focus on the first home buyer stamp duty concession and how that is supposed to act, versus its current iteration.
As it stands today, for a first home buyer the stamp duty on a purchase up to $500,000 is reduced to $0. For a purchase between $500,000 and $549,999 there is still some stamp duty to pay but it remains discounted to a degree. Hit that $550,000 mark though, and the discount disappears – leaving you with just the (much smaller) home concession.
5 years ago, a $500,000 limit was entirely appropriate (at least in Cairns). With that budget providing access to a wide range of housing and areas – removing an impediment to home ownership for those making their first property moves.
Today? There are just 37 houses available from Gordonvale to Palm Cove with a price below $550,000 – ranging from a half duplex and up, with virtually nothing north of Aeroglen.
Unfortunately for prospective first home buyers, we can’t wind back the clock on prices (nor should we). But this is an opportunity for the QLD government to re-evaluate the current caps and look to ensure that this concession does what it is supposed to – support market entry. If this is the case here in Cairns, I can only imagine its even harder for those in the south-east.
The Government could also just get rid of Stamp Duty altogether (if it REALLY wanted to). But I think we would take the tune-up in the meantime.