Stamp duty on house sales is set for another cut in next week’s budget, as the ACT government moves to phase out the tax over 20 years. Rates are gradually increasing to make up the shortfall in revenue from cutting stamp duty.
If cuts that were set out last year go ahead as planned, stamp duty for a $500,000 house will fall to $15,800 next week, a saving of $1300. But for more expensive houses, the savings are much smaller.
But the Gallagher government has not revealed whether it will stick to its timetable for cutting stamp duty and increasing rates. It may bring cuts forward as it seeks to stimulate the local economy and keep it out of recession. Although it is less likely, it may delay cuts to stamp duty to shore up revenue given the dismal state of its budget.
Any cuts to stamp duty are likely to take effect immediately after the budget is brought down on June 3, to avoid sparking a lull in the housing market if cuts took effect with the new financial year on July 1.
The timetable set out last year would cut stamp duty as follows:
- $300,000 house: $7500 stamp duty, a saving of $600.
- $500,000: $15,800 stamp duty, a saving of $1300.
- $750,000 house: $28,300 stamp duty, a saving of $1300.
- $1 million house: $44,550 stamp duty, a saving of $1300.
That’s the good bit. The tougher news comes in rates hikes, and these haven’t been foreshadowed in previous budget papers. The only hint of the possible scale of rates hikes is in the estimate of rates revenue overall, which is to increase from $338.4 million this financial year, to $376.3 million from July 1, a riseof more than 10 per cent.
The figures in the forward estimates, though, were put together a year ago, and could be quite different by next week’s budget. In addition, if there was an average 10 per cent increase, the actual figure for individual houses would vary widely, given that rates are tied to land value, and given also that the ACT government runs a progressive rates system, in the sense that people with more expensive houses pay a greater share.
In the current year, home owners faced an average rate increase of 10 per cent, and commercial properties of 20 per cent.
The Government has a handy stamp duty calculator, which should be updated soon after the budget.
There is a rates calculator, too, but that’s not likely to be updated till July 1 (and it is only a guide).