Transfer (Stamp) Duty will be linked to the Consumer Price Index (CPI) from July 1, 2019. So what does this mean? Well, you should save a few dollars on stamp duty by 2021 or 2022.
The immediate tax cuts resulting from this reform are relatively modest over the short term, with the duty payable on an average dwelling expected to fall by around $330 by 2021-22.
Exactly, why now! Transfer duty brackets (more info on that below) have not changed since 1986. Had transfer duty been pegged to the CPI in 1986 the transfer duty on a $1,000,000 property would be about $8,000.00 less than it is today. That’s a little better than the expected saving of $330 by 2022!
The reason behind this change is to prevent bracket creep.
Bracket creep is where the Government sets the tax levels (Brackets), in this case for transfer duty, currently there are 7 transfer duty brackets (see below). The higher the purchase price the higher the tax bracket and the more transfer duty a purchaser has to pay. Property prices increase with inflation and purchasers are pushed into higher transfer duty brackets. Linking the transfer duty brackets to the CPI will prevent purchasers being pushed into the next bracket as inflation increases over time.
|1||$0 – $14,000||$1.25 for every $100 (the minimum is $10)|
|2||$14,001 to $30,000||$175 plus $1.50 for every $100 over $14,000|
|3||$30,001 to $80,000||$415 plus $1.75 for every $100 over $30,000|
|4||$80,001 to $300,000||$1,290 plus $3.50 for every $100 over $80,000|
|5||$300,001 to $1 million||$8,990 plus $4.50 for every $100 over $300,000|
|6||Over $1 million||$40,490 plus $5.50 for every $100 over $1 million|
|7||Over $3 million||$150,490 plus $7.00 for every $100 over $3 million|