The NSW government has shocked the property industry by imposing a 2.25 per cent tax on the sale of investment properties at a time when the housing market is already suffering a downturn.
Wednesday, April 7th 2004, 2:18AM
by The Landlord
In an urgent mini-budget, the Carr government has cut spending by $365million but increased funding to the politically sensitive areas of trains and hospitals and exempted most first-home buyers from stamp duty. The savings measures, which could result in the loss of up to 3000 public service jobs, were aimed at fixing a sharp financial deterioration that has pushed the state's budget into a deficit of about $300million, for the first time in nine years.
NSW Treasurer Michael Egan said the controversial move to impose a stamp duty on the sale of investment properties and a decision to widen the state's land tax base were good because they would help slow the property market.
"Whilst investment in residential investment real estate will be marginally less attractive because of this package, I actually think that's a good thing," Mr Egan said.
But Property Council executive director Ken Morrison said: "This is a major attack on property investors and businesses who own their own property."
Property taxation has been under scrutiny across the country because of the way state governments have become dependent on it during the property boom and the Productivity Commission is due to report soon on alternatives.
But some other states said yesterday they would not be introducing a new tax on investor sales or changing their land taxes.
The NSW changes hit property investors because they will now pay a 2.25 per cent stamp duty when they sell their properties on top of the normal purchaser's stamp duty, and now many will also be liable for annual land tax of 0.4 per cent to 1.6per cent.
