What is stamp duty?
A recent release from the Real Estate Institute of Queensland (REIQ) has offered some proposed changes to the state's stamp duty laws, which would make it easier for first time buyers to make moves into their local property market.
This could be wonderful news for anyone sitting on the fence about potentially purchasing real estate in Surfers Paradise, with REIQ chief executive officer Antonia Mercorella stating the abolishment of stamp duty could be conducive to a growing Queensland property market.
"Queensland's residential real estate sector is in recovery mode and it's important to build on this momentum. Real estate is crucial to the Queensland economy, contributing more than $8 billion towards Queensland's gross state product and supporting almost 50,000 jobs throughout the state," said Ms Mercorella in a 19 January statement.
The proposed changes would mean the abolition of stamp duty on property transactions, helping to alleviate the costs involved with the process and aiming to encourage more people to consider buying property. Further changes would include the reinstatement of first home owner grants for existing properties, as well as allowing first time buyers to access their superannuation as a way to purchase a home.
But what is stamp duty how does it affect property sales?
Basically, stamp duty is an extra tax charged on top of property transactions, which effectively pushes up the amount buyers are spending to purchase real estate. Legally, buyers need to pay the stamp duty within 30 days of the property settlement, and is charged differently depending on what state the purchase is made in.
In Queensland, the current stamp duty rates depend on how much money is spent. For example, between $75,000 and $540,000, the duty rate is $1,050 plus $3.50 for each $100 or part of $100 when the dutiable value is more than $75,000.
This is a similar pattern for higher price brackets. For example, purchases between $540,000 to $1,000,000 will see a charge of $17,325 plus $4.50 for each $100, or part of $100, if the dutiable value is more than $540,000.
On top of this, other fees like mortgage registration and land transfer fees are also charged on these transactions. So with these additional fees being charged on top of the original price of the home, it's easy to see how it can be difficult for first time buyers to make moves into the local Surfers Paradise property market.
Therefore, the suggestions made by the REIQ aim to make the process easier for buyers in the near future. Ms Mercorella said the abolition of these fees would be able to generate a higher property transaction turnover – which in turn helps bolster the overarching real estate industry.
"Stamp duty on property transactions should be abolished and replaced by a more efficient source of revenue. It's a regressive tax which imposes additional costs on property transactions, thereby discouraging turnover of housing and distorting choices between renting and buying," said Ms Mercorella.
Furthermore, the REIQ also suggested changes to first home buyer grants and the use of superannuation funds for property to help boost this turnaround.
"A more widely available first home owner grant will strengthen the real estate market, while delivering a crucial boost to the state's wider economy. First home owner grants are an important form of financial assistance and there's no sound basis for the preferential treatment which currently exists for buyers who purchase newly built properties," said Ms Mercorella.
The future for Surfers Paradise's property market appears to be tied to the potential statewide changes suggested by the REIQ. First time buyers sitting on the fence could be interested in these developments, especially if it means being able to move into the local market with more ease and less expenses.