The government has once again decided to slug property buyers with another tax that they hope is going to raise them $90million a year. The newly conceived Sales Tax is to start on 1 July and is going to be calculated on all sales of residential property over $500,000. Any residential property sold between $500,000 and $1 million will attract a tax rate of 0.2 per cent, while above $1 million, the tax rate increases to .25 per cent for that portion of the property sale price.

So with the median property price in Sydney at $600,000, the tax that would be payable is going to be $200, while those homes at $1.2 million will be hit $1,500.

When we look at the actual numbers involved in an isolated manner they are small relative to the purchase amount but we still have to remember the whopping amount of stamp duty we are paying each time we purchase a property. A $600,000 property will incur a $22,490 stamp duty tax, a transfer fee of $190 and a mortgage registration fee of $95. So there has already been a fee for transfer and now it has more than doubled for the average NSW home buyers ($190 + $200).

We also have to remember when buying a property there many other costs associated with it which could include insurance, council rates, strata fees, solicitor fees, mortgage fees, valuation fees, Building inspection fees, depreciation schedule costs, defect inspection costs and lenders mortgage insurance. Buying a property is not a cheap exercise and adding any additional costs to the purchase process is only going to continue to defer some home buyers which is disastrous for them and the economy.

Buying a home or investment property in Australia has been a great way to build wealth and many Australians have done so over the years… Now the government just wants to take advantage again and slug those that have been the main contributors to society with another tax to bring them down. Home ownership, whether it be for owner occupied use or as a property investor, is critical to the NSW and national economy and to stop people buying by continuing to slug extra taxes and expenses on them is only going to hurt the NSW state in the long term.

The big question is… What if they raise the Sales Tax in the future!

4 Comments »