We're a Baker Tilly network member
About Baker Tilly
Back to top
NSW State Budget: Home buyers choice
Article

NSW State Budget: Home buyers choice

The NSW State Government proposal to give home buyers a choice between paying up front Stamp Duty or an Annual Property Tax (APT) is seductively simple yet potentially punishing. There are (at least) three aspects of the proposed APT that don’t sit well.

First, the average punter trying to enter the home property market will likely fall for the seduction of paying a significantly smaller upfront APT compared to the alternative significantly larger Stamp Duty. However, the payment of Stamp Duty is a ‘one-off’ burden, the pain of which subsides overtime. On the other hand, the APT is forever; year in year out until the property is sold by the current owner, a pain which is relived each year (on top of Council rates).  It’s the ‘forever’ aspect that punters will miss with the APT. APT is the State Government’s gift that keeps on giving, irrespective of the property cycle.

Secondly, the choice is not really a ‘true’ choice. A ‘choice’ suggests that each time you purchase a property, you are given a choice to select between paying upfront Stamp Duty or the APT. This is not the case. Under the proposal, once a property is subject to the APT, subsequent owners must pay the APT. That is, you cannot choose between paying Stamp Duty and the APT on a property that has already been subject to APT. Now that’s not real ‘choice’.

Third, APT may be unfair for freehold property owners. Under the proposal, owner-occupied residential property would potentially attract an APT of $500 + 0.3% of the unimproved value. It is generally accepted the unimproved land value for a unit is less than that of a freehold property; yet their market values may be the same. This would result in a freehold property owner paying more APT than a person who owns a unit with the same market value.  What distortions will this create in property construction, more units?

Below is an example based on real data.

Paying Stamp Duty
Purchase price unit in Blacktown $380,000
Duty payable $12,435
Paying annual Property Tax
Land tax value of the unit $183,600 x 0.3% + $500 = $1,051
Breakeven 12,435/$1,051 12 years

Therefore if a young couple’s intention is to live in their home for more than 12years, they are better off paying stamp duty  If intention is to leave before 12years (say because of children), then better to pay the APT.  Of course, the land tax values will likely increase within a 12-year period, but this will also means the breakeven period will be shortened making the choice to pay upfront Stamp Duty more attractive.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

Pitcher Partners insights

Get the latest Pitcher Partners updates direct to your inbox

Thank you for you interest

How can we help you?

Business or personal advice
General information
Career information
Media enquiries
Contact expert
Become a member
Specialist query
Please provide as much detail to ensure appropriate allocation of your query
Please highlight a realistic time frame that will enable us to provide advice within a suitable and timely manner. Please note given conflicting demands with our senior personnel, we will endeavour to respond to you within the nominated time frame. If you require an urgent response, please contact us on 03 8610 5477.
Responses to queries submitted via this form (“Response”) are produced by Pitcher Partners Advisors Proprietary Limited and are prepared for the exclusive use and benefit of those who are invited, and agree, to participate in the CRITICAL POINT NETWORK service. Responses provided, or any part thereof, must not be distributed, copied, used, or relied on by any other person, without our prior written consent. Any information provided is intended to be of a general nature and prepared without taking into account your objectives, circumstances, financial situation or particular needs. Any information provided does not constitute personal advice. If you act on anything contained in a Response without seeking personal advice you do so at your own risk. In providing this information, we are not purporting to act as solicitors or provide legal advice. Any information provided by us is prepared in the ordinary course of our profession and is based on the relevant law and its interpretations by relevant authorities as it stands at the time the information is provided. Any changes or modifications to the law and/or its interpretation after this time could affect the information we provide. It is not possible to guarantee that the tax authorities will not challenge a transaction or to guarantee the outcome of such a challenge if one is raised on the basis of the information we provide. To the maximum extent permitted by law, Pitcher Partners will not be liable for any loss, damage, liability or claim whatsoever suffered or incurred by any person arising directly or indirectly out of the use or reliance on the information contained within a Response. We recommend you seek a formal engagement of our professional services to consider the appropriateness of the information in a Response having regard to your objectives, circumstances, financial situation or needs before proceeding with any financial decisions. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.
CPN Enquiry
Business Radar 2025
Dealmakers 2025
Federal Budget 2025-26
Search by industry