Stamp duty will be permanently abolished for all new dwellings bought off the plan in the ACT valued up to $500,000, in a move the ACT government says will increase the supply of affordable housing.
Buyers will save $10,360 in stamp duty on the purchase of an apartment or townhouse worth $500,000 under the change, which will come into effect on Thursday.
The shift will extend part of a stamp duty reduction program that was introduced as a temporary stimulus measure in response to the early economic impact of the COVID-19 pandemic.
Canberrans have not paid stamp duty on off-the-plan apartments and townhouses up to $500,000 since June 4 last year.
Under the new permanent changes, the government will also cut stamp duty on all properties bought by owner-occupiers between $200,000 and $1.455 million by $1040.
Chief Minister Andrew Barr said the abolition of inefficient taxes in the ACT in favour of a more efficient tax base had boosted the territory economy and supported housing affordability.
Mr Barr said the ACT government was focused on housing affordability in its next phase of stamp duty cuts.
"Whether you're looking to purchase your first home, downsize or upsize, the reduction of stamp duty rates will make it easier to purchase and ensure all Canberrans will benefit from fairer, simpler and more efficient taxes and duties," Mr Barr said.
Mr Barr said if the ACT government had not begun to reform the territory's tax system in 2012, buyers would now be paying more than $20,000 in stamp duty on homes
"Just across the border in NSW, home buyers are paying up to $17,707 in stamp duty for such a property," he said.
The ACT budget recorded a $41 million boost driven by a booming Canberra housing market, as stamp duty revenue surpassed Treasury expectations.
Revenue from residential stamp duty made up a huge portion of the increase, the government's quarterly financial report showed.
Stamp duty brought in $157 million in the nine months to March 31, far exceeding the government's expected revenue of $120 million.
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The ACT government is nearly halfway through a two-decade tax reform program, which has reduced duties and replaced them with higher rates.
But critics - including former Labor chief minister Jon Stanhope - say the reform is regressive, as households on land with lower values have faced the largest increases in their rates bills. Others have accused the ACT government of "double dipping", as revenue from taxes set to be phased out has remained steady despite the rates bill increases.
The ACT government, however, has maintained its commitment that the 20-year reform program will be revenue neutral over the full transition period. An analysis completed by Treasury found the ACT government collected $62 million less revenue in the first seven years of the scheme than if no reform was undertaken.
Rates bills for Canberra homeowners will increase by 3.75 per cent in the new financial year, with most ratepayers set to pay the full increase as coronavirus pandemic relief measures are wound back.
Instead, the government will decrease fixed rate charges. For houses, this would fall from $923 to $800 and for units it would drop from $958 to $850.
Mr Barr said this would mean lower increases for properties with lower unimproved values.
Mr Barr has previously told The Canberra Times he would target build-to-rent projects in an effort to rapidly increase the number of affordable dwellings in the ACT.
The Chief Minister also said the ACT government expected it would need to provide more dwellings in coming years and was actively assessing its land-release program.
The government would consider putting conditions on land sales to compel developers to construct build-to-rent projects, or partnering with developers in land rent schemes, he said.
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