This article is from the Australian Property Journal archive
THE NSW Government has introduced a new “ad valorem†tax, hot on the heels of lifting the development levy by 4% earlier this week.
The Keneally Government yesterday announced a new property tax for transactions of $500,000 or more, and applies to commercial and residential real estate.
The levy will be imposed at a rate of 0.2% for the portion of land transactions between $500,000 and $1 million, and 0.25% for the value above $ 1 million. This is a $23,500 impost on the purchase of a $10 million development site and a $123,500 impost on a $50 million development site.
The Urban Taskforce’s CEO Aaron Gadiel pointed out that new “ad valorem” levy is the second new property tax from the NSW Government in three days.
“It follows the NSW Government’s decision on Monday to authorise a 4% levy on development in Burwood – the highest levy of its kind in Sydney,” he added.
Gadiel said the “ad valorem” levy was not a genuine user charge, as the costs of running the land titles office had little to do with the actual value of a transaction.
“This is merely a disguised increase in the rate of stamp duty. It’s equivalent to a 4.5% increase in the stamp duty. It’s simply another tax for businesses in NSW to bear,” he continued.
Its not just the development industry which has expressed opposition to the new tax. The Law Society of NSW president Mary Macken said the new property transfer charges were an unfair tax that would burden first home buyers and others.
“To be fairer, the government should be increasing the threshold to $750,000 so the purchaser of the average home is not caught by this new cost.
“With the average price of a home in NSW costing over $500,000, most people buying a new house in the State will be hit with the tax. It will also catch many first home buyers and these struggling people will, sadly, face increased costs on buying a home,” she added.
Macken pointed out that a few years ago the cost of transfers was about $50.
“But it has already increased substantially over the last few years and from July 1, it will increase even more to $194. It should be noted that there has been no consultation with the Law Society and the Real Estate Institute about these new ‘ad valorem’ charges.
“Also, the Torrens Assurance Fund is continuously being pared back by Government seeking to limit its exposure to claim under the Fund. But at the same time the Government is seeking to charge consumers more for a fund to which they will have limited access.” Macken said.
Gadiel said this is a very disappointing move by the state government.
“It again sends the message that anyone who invests in NSW will be subject to unpredictable and ever-changing imposts,” he concluded.
Australian Property Journal
