Government will go hard on residential stamp duty: Chief Minister Andrew Barr

The focus would shift more aggressively to cutting residential stamp duty over the coming decade, Mr Barr said. First, the government was halving stamp duty for commercial property sales worth less than $1.5 million from the 2017-18 year, then abolishing stamp duty on those sales altogether from 2018-19.

"I won't be the treasurer in the early 2030s to complete this task, but my successors should complete this task," he told a parliamentary estimates hearing.

"Once the small to medium-sized commercial is complete, we go hard on residential. And through that period we maintain a low flat rate on large-scale transactions, then at the very end of the process look at those large-scale transactions."

His comments came as a comparison with NSW shows Canberra's rates of stamp duty are higher than NSW for properties worth $1 million or more and will remain that way for two more years at least.

Among residential properties, a $1 million home attracts tax of $40,500 in NSW and $42,200 in Canberra. Canberra will drop below NSW for $1 million homes in 2018-19, according to Sydney adviser on state taxes Joanne Seve.

A $1.455 million property sale pays $65,500 in tax in NSW and $74,100 in tax in the ACT – with the ACT not falling below NSW rates until 2020-21.

Canberra's stamp duty rates are lower than NSW for houses under $1 million, with a $750,000 sale in Canberra attracting $26,000 in tax, compared with $29,200 in NSW.

The median price for a house in Queanbeyan is about $500,000, attracting stamp duty of $18,000. In Canberra, the buyer of a $500,000 house in Canberra pays $13,500.

The government's program to cut stamp duty progressively and replace the lost income with rates has been widely applauded by economists but has attracted controversy for the big increases to rates and for the slow progress on stamp duty. The government continues to collect more money year by year from property sales as property values rise.

Mr Barr said the government had focused so far on cutting stamp duty for the bottom half of the housing market.

Now, the focus was on commercial sales less than $1.5 million.

"Having made the changes that we've announced in relation to small- and medium-size commercial, that's the medium-term objective – we get that tax free and then we can switch our focus almost exclusively over the next decade to the residential side."

In NSW, if you sell a commercial property worth $1.5 million, you pay $68,000 in stamp duty. In Canberra, the tax is $76,400.

Only at the top end – commercial property sales worth more than $3.75 million – are Canberra's rates marginally lower than NSW, with a tax of $192,000 in NSW and $191,000 in the ACT.

A flat rate of 5 per cent on commercial sales over $1.5 million would make the ACT "very competitive with NSW and Victoria", Mr Barr said.

"The large commercial transactions in Canberra tend to be undertaken by large foreign investors or large institutional investors, so maintaining a level of stamp duty in relation to those transactions over $1.5 million over the medium- to long-term is a defensible policy position," he said.