Let first home buyers delay paying stamp duty

by AB23 Jul 2013

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.”


  • by NoTimeLikeTheFuture 23/07/2013 9:37:40 AM

    Lenders will just factor the stamp duty from selling price and we get the same LVR as today.

    Instead Gov't should loan first home buyers the stamp duty at 5% PA in a HECS style arrangement with automatic second mortgage on the property.

    Reduces LVR for home buyer, about 1% will default but more than made up by the 10% or more who otherwise couldn't have paid stamp duty at all - so net gain for Gov't.

    And 5% PA is a decent earn for the gov't at today's bond rates.

  • by Papery 23/07/2013 9:53:36 AM

    Disagree completely....what if the property fails to improve in value. I wonder how the LMI providers would adjust their policies if this idiocy got adopted... who takes priority when the sale goes through (forced or otherwise).
    We are already seeing negative equity situations. If you cant cover the upfront costs then you just shouldnt be in the market. Property values remain high in Australia & verging on being unaffordable for most & thats the issue that needs addressing, not how do we continue to prop up an already inflated market.

  • by Scott Beattie 23/07/2013 10:49:18 AM

    Won't the GST abolish all taxes and the like anyway???
    I guess it's only 2014 and the GST only came in 14 or so years ago......