Stamp duty changes that came into force today and trumpeted in the recent Queensland budget as a big gain for home buyers will put most buyers in the property market in a worse or only a marginally better financial position. The only major beneficiaries are first-time home buyers and they won’t get those benefits until September.
First home buyers benefit from a higher exemption level. There is no stamp duty in respect of homes priced up to $350,000 for first-time buyers. The level increases to $500,000 from September 1. First-timers who buy homes priced higher than this from September get a reduced exemption that decreases to Nil at $549,000. If you buy a home priced at $550,000 or above, no exemption applies.
Owner-occupiers (other than first-timers) pay a flat 1% rate of stamp duty for the first $350,000 of the purchase price (up from $320,000) and at the higher rates referred to below for the component of the purchase price above that figure.
Stamp duty on non-owner-occupied property ie investment and commercial properties, and on the non-concession component of higher-priced owner-occupied homes, has dropped on homes priced up to $590,000 but increased significantly on higher-priced property.
In those neighbourhoods where the average sale is in the band between $300,000 and $500,000, the benefit (except first-time buyers) is around $50 – insignificant in terms of the overall transaction. In locations where the average sale is around $800,000, the extra duty of $550 is a significant additional expense.
The changes will make it harder for families wanting to upgrade to the highest quality homes and locations. The biggest benefit is for very low priced buys. For example the duty on a $100,000 investment property in June was $2,350 and is now $1,925 – a saving of $425. But on a $300,000 investment property the duty of $8,925 yields only a saving of only $50.
The duty increase for the higher-priced property is far greater than the reductions for “cheapies”. At $2 million for example, the extra duty is $8,200!
Other examples are:
Contracts dated before July 1 are still subject to the old duty rates.
One bright spot for all property buyers is that stamp duty on mortgages and loan transactions has been abolished. For example, the duty of $860 previously payable on a $500,000 loan, is now nil.