About time that this happened! Vendor duty on contracts for land related property in NSW were abolished from 2 August 2005. This applied to all contracts entered into (ie exchanged) on or after 2 August 2005. The Office of State Revenue has also put Anti-avoidance provisions which will basically prevent contracts being rescinded and re-issued with the same buyer. Hopefully the NSW Labour govt has recognised that this duty was viewed by investors as a mere money grab and totally unnecessary.
That's right. PPOR's are exempt, as they also are from capital gains tax. After all, there has to be some incentive for paying those big mortgages with no tax breaks!
So do you think this will go down in "investing folklore" (like the time they abolished negative gearing) as one of those disaster periods when silly government tax policies messed a heap of stuff up to the point where they had to reverse the policy ?
Most definitely one of the sillier tax decisions made by the (now ex) Carr govt. It served only to artificially depress the NSW market and peeve off investors. I know a lot of investors went north
When the vendor tax was first introduced, I distinctly remember saying that it won't be around when the next state election is held. The cynical side of me saw it as a quick grab for money in between elections. Does it amaze anyone that the architects of the tax are no longer there. I think they knew they wouldn't be around to face the music, and their replacements could say they removed the tax and appear as the good guys - in the meantime, tens of millions of dollars were collected for the government. TakeStock
Great to see a labor politician take a stand against a decision made by his predecessor so quickly. Definitely an election issue. Will go down as one of the dumbest taxes ever introduced. NickM
I don't believe the abolition of this tax alone will be responsible for a rebound. However, with the combination of the re-introduction of the land tax threshold in 2006, and a slowing down/flattening of the market generally, it certainly points to an interesting future. With rental yields on the improve and finance still relatively cheap, I'm sure some investors will be encouraged back into property- perhaps not the landslide that the NSW govt hope for, but more of a steadily increasing trickle that will gently lead us into the next upswing stage of the cycle. The last boom has been described as an anomaly by some gurus (Peter Spann for eg) as it lasted longer than most Australian booms. If this is the case, then perhaps the next boom won't be as dramatic?
Interesting scenario could arise where vendors that have been holding out for the vendor duty to go are now planning to sell sept/oct / Nov. Traditionally strong sales are seen in these months. Could this result in prices holding steady or dropping further due to an influx of supply on to the market ? The abolition of the vendor duty will not affect those that have bought OTP or have to sell a property that they bought in the last 2-3 years as they would have struggled to get over the 12% threshold. It will now allow vendors that have been waiting to cash in on gains achieved over the longer period to sell without the state Govt getting their slice of the gain. NickM
