As part of a 20-year tax reform program, the ACT Government has confirmed plans to scrap the $7000 first home buyer’s grant, in favour of abolishing stamp duty.
The change, which will come into effect on 1 July 2019, allows first home buyers with a household income below $160,000 to purchase any home, at any price, and have the stamp duty waived entirely.
However, the win for first home buyers comes at a cost to existing homeowners, with rates and land taxes set to increase across the ACT.
Wayne Harriden, Executive Director of Project Marketing at Independent Property Group, says: “In general, the latest Budget release brought no unwelcome surprises. It’s good news for first home buyers, and certainly relieves the pressure of needing to save for or pay off stamp duty.
“The changes are especially positive for the established housing market, which will now be opened up to first home buyers (FHBs) who have traditionally been driven to purchase new or off-the-plan properties. This will no doubt result in more competition in the established market, leading to higher demand and an increase in prices.
“With less FHBs purchasing off-the-plan, more investors are likely to move back into the apartment market, which will, in turn, create more supply for renters.
“Landlords will, however, need to recoup the increases to tax and rates, which will be passed down to renters in an already very tight rental market.”
Mark Edlund, Managing Director at Clarity Financial Group, says: “Right now, first home buyers who purchase an established home under $607,000 can apply to defer their stamp duty for up to 10 years.
“So, having to fund stamp duty has not been a significant impediment to purchasing for FHBs, however the overall scrapping means buyers won’t need to pay it off in the future. It also means that FHBs wanting to purchase more expensive properties can do so without worrying that they are missing out on stamp duty deferral.
“The fact that stamp duty will be scrapped regardless of property type will also broaden the style of properties first home buyers seek to purchase. And this is good news for those looking to sell an established property.”
Mark says that because the NSW changes made last year to first home buyer’s incentives are slightly more attractive, it may push buyers to consider purchasing in suburbs such as Queanbeyan, Jerrabomberra and Googong.
Since 1 July 2017, NSW first home buyers are entitled to:
- A $10,000 FHB grant when building a new home up to $750,000
- Stamp duty waivers for all properties up to $650,000
- Stamp duty discounts for all properties between $650,000 and $850,000
“If you’re set on purchasing your first home in Canberra, it’s important to weigh the benefits of purchasing between now and 1 July 2019. The date of exchange determines whether you fall under the old scheme or the new. For those looking to buy a new property for $500,000 or less, it may be ideal to jump in now and grab the $7,000 grant, as well as take advantage of the current stamp duty concession.”
For more information about the changes in stamp duty, or to learn more about stamp duty waivers, contact Mark from Clarity Financial Group on (02) 6209 1990.
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