New Levy on the Sale of Residential or Commercial Property By Ratnadeep Hor | May 2010 Area of Expertise | Business & Property
Summary The NSW Government recently announced a new levy on the sale of residential and commercial property.
Who Does This Impact? All purchasers of residential and commercial property in New South Wales.
What Action Should Be Taken? Check with your solicitor or the Ofﬁce of State Revenue for the amount of stamp duty payable for your contract for sale.
On Wednesday 12 May 2010, the Minister for Lands, Tony Kelly, announced the introduction of a new ad valorem transfer levy to be imposed on the sale of residential and commercial property over the value of $500,000. The Minister has not as yet announced when the new levy is to commence and it is unclear whether the threshold of $500,000 will be indexed. Under the proposal, the purchaser is liable to pay a levy in respect of the sale price. In respect of a purchase price between $500,000 and $1,000,000, the purchaser must pay an additional 0.2%. On any portion of the sale above $1,000,000, the levy rate will increase to 0.25%. For the sale of an average home in NSW (estimated at $600,000), the tax will effectively increase the stamp duty by $200. The sale of a home for $1,000,000 will effectively increase the stamp duty by $1,000 and for the sale of a home for $1,500,000 the increase is $2,250. A developer looking to acquire a $10 million development site for housing will have to pay an extra $23,000. The Minister announced that the new levy will help fund the strengthening of the equity of NSW property transactions and improve the security of the Torrens title system. The levy is intended to combat fraud and underwrite payouts to victims of fraudulent conveyancing transactions which have increased dramatically in recent years. However, the Minister also acknowledges that the surplus revenue from the levy will ﬂow to consolidated revenue. No legislation is available yet but the announcement was careful to describe the charge as a ‘levy’ rather than an increase in stamp duty. The Minister has been accused of quietly introducing the new levy amid the wash-up of the Federal Budget announcements. The opposition has labeled the introduction as ‘sneaky’ and has expressed its criticism of the ‘new tax’, summed up best by Shadow Treasurer, Mike Baird, who comments ‘whatever way you dress this up, it’s not Cinderella at the Ball, its an ugly, dirty tax’. (Bennett, A, ‘NSW: Govt accused of sneaking in new property tax’, 12 May 2010, Legal Online - Thomson Reuters) The industry, including the Urban Taskforce and the Property Council of Australia, has also expressed its criticism of the new charge and has complained as to the lack of consultation. However, any way you look at it, the new levy is estimated to raise $90 million for NSW annually.
TU R K A L E R T
New Levy on the Sale of Residential or Commercial Property by Ratnadeep Hor
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