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The ACT’s plans to phase out stamp duty over a 20-year-period, replacing it with an annual land tax, could spark increased activity in the property market.
Martin Bregozzo, senior property manager and property economist at BIS Shrapnel, told Smart Property Investment that abolishing stamp duty could free up the market and encourage mobility.
“The big inhibitor of [people] buying a house is that [they’ve] got to find an extra $40,000 or $50,000 cash outside of the deposit to pay the government,” Mr Bregozzo said.
He explained that the current system is a barrier for people needing to move because it’s a hefty add-on price they have to pay each time they purchase a property.
Replacing the stamp duty with an annual land tax could also provide the ACT government with an assured revenue steam and opportunities for investors.
"In a booming market, the state governments are awash with money. But when the property market falls over or storms, then they’ve got no money."
While investors may pay more each year, rents could also potentially increase, Mr Bregozzo continued. Instead of paying stamp duties, investors could have a higher amount of equity in their investment property or the capacity to buy two properties instead of one.
With the market freed up, more supply could also be injected into the market, he added.
Land tax, also known as property tax, is the fee paid on the purchase of a property owned by an individual or other legal entity.