The budget released in May outlines a number of cuts that will help reduce the deficit from the current $49.9 billion to just $29.8 billion next year, and to $2.8 billion by 2018.As part of the plans to cut the budget deficit, a number of changes have been made to welfare entitlements, including changes to the stamp duty exemption for first home buyers. If you, or anyone you know, is planning on purchasing a first home in the next few years, you will need to be aware of these changes.
Changes to Stamp Duty in WA
Outlined below are the changes to stamp duty in Western Australia as a result of the government’s latest budget:
● The stamp duty exemption for first homebuyers will be reduced from the current $500,000 down to $430,000, starting on 1 July 2014.
● Purchases of vacant land by first homebuyers that cost up to $300,000 will continue to be exempt from stamp duty. The concession for this type of purchase phases out at $400,000.
● Stamp duty concessions will also phase out progressively for properties worth between $430,000 and $530,000. This is reduced from the current $600,000.
The changes to the stamp duty will affect a large number of first home buyers in WA. The Director of Agem Property, Adrian Fiore believes that ‘these are considerable cuts, which could affect the ability of first homebuyers to purchase a home’.
For properties worth up to $450,000, the transfer duty payable still remains lower in WA compared to all other States and Territories in Australia, with the exception of Queensland. However, for properties of a higher value, in general, there are higher stamp duty charges in WA than other states. Properties worth $750,000, for example, will incur transfer duty worth $29,740 in WA, which is even higher than NSW’s $29,240.
What the Changes Mean to You
If you are a first homebuyer, you will most likely be impacted by the changes to stamp duty. It may now be the case that you are considering lower priced properties to avoid the stamp duty.. The changes may also make you reconsider your budget for a home, as the stamp duty is an additional cost you have to factor in to the other costs associated with buying a home.
The change in the stamp duty also makes it more attractive to purchase vacant land and build your own property, since the threshold for the exemption remains at $300,000.