First home buyers in Canberra will no longer have to pay stamp duty, regardless of the value of their home, starting July 1. The decision, announced by Chief Minister Andrew Barr, will save first home buyers $30,000 on a $1 million home and $70,000 on a $1.5 million house.
Unprecedented Tax Cut for First Home Buyers
Canberra, which consistently records the highest median personal and household incomes of any capital city in Australia, becomes the first jurisdiction to eliminate stamp duty for first home buyers entirely. The changes are not means-tested, meaning the tax cut applies regardless of income. Additionally, pensioners, people who have been out of the property market for five years, and some NDIS recipients will also be exempt.
"We have now reached the point for key groups, stamp duty can be eliminated entirely, forever," Chief Minister Andrew Barr said. "It's gone, never again to emerge. This budget marks a major milestone in our long-term tax reform program, delivering a fairer system and improving housing affordability."
Part of a 20-Year Tax Reform Road Map
The changes are part of a 20-year tax reform road map initiated in 2012. The ACT government has already abolished insurance duty, saving a household with $3,000 worth of insurance $300 a year, and raised the payroll tax threshold to $2 million, ensuring that 90 per cent of ACT small and medium businesses pay no payroll tax. The government has also cut stamp duty to zero for commercial property transactions worth $1.5 million or less, exempting around 70 per cent of commercial property transactions.
Over the next five years, the ACT government intends to progressively remove stamp duty for other groups beyond the initial exemptions.
Impact on All Home Buyers
The budget will also cut stamp duty rates for all home buyers. For example, someone who is not a first home buyer but purchases a $500,000 residential property will now pay $9,100 less in stamp duty than when tax reform commenced. In 2019-20, stamp duty for a $500,000 property in the ACT was $11,400, compared with $17,990 in New South Wales and $21,970 in Victoria.
The Catch: Higher Rates
However, homeowners in Canberra will continue to pay some of the highest council rates in the country, up to $7,500 a year in some wealthy suburbs. Most states and territories already offer some stamp duty exemptions for cheaper homes and apartments, but previously in Canberra, the exemption only applied to homes under $1 million and required purchasers to meet income eligibility thresholds.
"The elimination of stamp duty for first home buyers complements the federal government's tax reforms by supporting younger generations of Canberrans to own their own home," Treasurer Chris Steel said.
Housing Targets and Debt
The ACT government has set a goal of building 30,000 new homes by the end of 2030 and introducing a pattern book of pre-approved plans to enable faster approvals. "Together, these reforms open the door for more renters to become owners, support younger households to build their future in Canberra, and ensure our tax system works better for the next generation," Chief Minister Andrew Barr said. However, the ACT remains mired in debt, with net debt projected to grow from $11 billion to $12.8 billion.
