Stamp duty charges should be amended to allow first home buyers an option to delay the charges and pay the tax when they sell their property, according to Loan Market.
The group’s director, Mark De Martino, says that if first home buyers were allowed to pay off the tax with the equity in their home when they sold it, more buyers would be able to enter the property market and avoid costly charges such as LMI.
“First home buyers in each state are nearly non-existent, despite the efforts of the RBA lowering interest rates and increasing confidence in the property market. One of the biggest challenges this group faces are erosion of their hard earned deposits by stamp duty taxes,” De Martino says.
“Allowing a first time buyer to pay stamp duty upon the sale of the property would instantly improve the LVR at the establishment of the loan and allow new homeowners to save a significant amount of money, that normally would be lost to tax.”
De Martino says that while stamp duty is an important state-based tax that helps governments raise money needed for infrastructure and essential services, the actual date it was collected should be amended to encourage activity in the housing sector.
“This system would allow a first home buyer to pay stamp duty with the equity in their home, instead of having to either bundle the cost into their mortgage or use their hard earned savings. Essentially, the government can help buyers save money and having to pay the banks more interest.”
De Martino says there are certain concessions on stamp duty for first home buyers in some states and that it’s important to stay up-to-date on policy announcements to see if there’s any exclusive opportunities for purchasing.
“The Victorian government just closed a huge opportunity for FHB’s to get a $7,000 grant and a 40% cut on stamp duty. There certainly will be opportunities like this in future as governments try to drum up activity in the property markets.”