Independent Property Group director of project marketing Wayne Harriden. Photo: Independent Property Group.
In a move designed to make housing more affordable and encourage an increased supply of housing below the $500,000 threshold, the ACT Government has abolished stamp duty on off the plan purchases for owner-occupiers.
Introduced on 1 July, buyers of townhouses and apartments valued at $500,000 or less can save up to $10,360 in stamp duty.
“In the past, stamp duty concessions have only been available for first home buyers,” Independent Property Group director of project marketing Wayne Harriden says.
“The extension to all buyers will act as a real incentive to developers and builders of off-plan property and help address housing affordability issues.”
To be eligible for a duty-free purchase, at least one of the buyers must intend to live in the property for at least 12 months after settlement. The contract must have been exchanged on or after 1 July 2021, and the value of the property must be less than, or equal to, $500,000.
The changes provide welcome relief for buyers of off the plan property. Photo: Independent Property Group.
Established homes do get a look in as well, with stamp duty reduced by $1,040 for all homes valued at $1,455,000 or under.
The changes are part of a two-decade tax reform package that replaces stamp duty with higher rates. By 2032, the government expects to have abolished stamp duty completely for all homes in the ACT irrespective of value.
In 2012, the government commissioned a review by former Treasurer Ted Quinlan into the Territory’s tax system. The Quinlan review recommended a gradual shift from conveyance duty to land-based taxes.
The intent of this new scheme is to be cost-neutral, with future rate rises balancing out against the loss of revenue from stamp duty.
Accordingly, the government has steadily reduced stamp duty. By abolishing stamp duty for properties under $500,000, buyers can save up to $10,360. Chief Minister Andrew Barr has also made the point that, had it not been for the previous stamp duty reductions, stamp duty on the same property would have risen to $20,500.
To compensate, the government has increased household rates over the past 10 years. In 2021-2022, ACT rates will rise by around 3.5 per cent.
The changes provide welcome relief for buyers of off-plan property, including first home buyers and downsizers. But do they go far enough?
Mr Harriden says he would like to see the reforms go further.
“We support the changes, which will make housing more affordable for Canberra buyers, and we’re looking forward to seeing stamp duty disappear altogether by 2032. In our view, expanding the changes to apply to investment property would be an extremely positive development.
“It would encourage investment in Canberra real estate and help address the worsening rental crisis,” he said.
For more information, visit the ACT Revenue Office.
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