NSW Stamp Duty -- Buy House now or wait for it be scrapped ?

LFlynny on 04/12/2020 - 22:26
Last edited 05/12/2020 - 08:02

Hi All,

As you know NSW govt is moving from stamp duty to property tax.

We were looking to buy our first house since 6-8 months.

Property worth is $1.1M, so stamp duty ~$40,000.

My Mrs wants to buy this house now, she thinks that the house prices will go up in near future or atleast when people just have to pay property tax and not stamp duty,.

I want to wait till March and then decide either to —> opting for stamp duty or property tax.

The main reason for me to think is that —> schooling ; my kids go to Primary school and may need to relocate in future for high school, so that happens then the
we will lose the stamp duty paid upfront.

What do you guys think ?

One other thing to look at it is —>

$40,000 stamp duty is taken off from my deposit.
LMI on $40,000 say around $8,000.

So this can be added back to my deposit, if I get to pay only Property tax per year

Poll Options expired

  • 41
    Buy Now & Pay Stamp Duty
  • 0
    Wait Till March and then decide
  • 1
    Buy After March Or Whenever Property Tax is introduced
Home & Garden

Comments

  • [Deactivated] on 04/12/2020 - 22:29
    +8

    My Mrs wants to buy this house now

    Always do as the Mrs wants.

    • SF3 on 04/12/2020 - 22:35
      +1

      OP, “a happy wife a happy life” assumed why you wanted some validation from OzB 😁

      You don’t want her to say, see you saved $$$, but it was the one we missed (OOS) is what we really wanted.

      You’re play with 🔥 applying OzB rules with property and the Mrs.

      • life is suffering on 04/12/2020 - 22:49
        +1

        fire with fire

      • Flynny on 04/12/2020 - 22:51

        I guess you are not married :)

        • SF3 on 04/12/2020 - 22:57
          +2

          Wrong.

          I don’t like your chances with this guessing game 😁

  • whooah1979 on 04/12/2020 - 22:40

    Buy later and pay land tax. Use the money you save on stamp duty to hedge with financial instruments.

    • mskeggs on 04/12/2020 - 22:49
      +1

      Didn’t neg, and this is likely accurate advice in a clinical way, and suitable for an investment you have no emotional attachment to (though not sure what would be a suitable hedge).
      I think the emotional/subjective elements of a home swamp the possible dollar benefits of treating your home purely as an investment.

      • whooah1979 on 04/12/2020 - 23:06
        +1

        I would look at (in no particular order) stocks, precious metals, digital assets, arts, collectibles, etc.

        Real estate is a store of value and its main function is to be used for speculative gains and passive income. People buying real estate because they love how it looks will end up overpaying.

        • mskeggs on 04/12/2020 - 23:31
          +2

          Real estate is a great place to live first of all!
          With a hedge the goal is to put money in an investment that will go up if the other asset goes down and vice versa.
          So a hedge for stocks has traditionally been bonds, or gold against inflation.
          Stocks, gold, art/collectibles tend to be assets that hedge inflation, but in this case the tax is a percentage of land value, so would be going up too, along with the value of the land.
          Maybe a land based derivative that climbs faster than land prices would work - off the plan deposit bond insurance?
          It kind of is already hedged as it is based on land value.
          If you mean hedging against the option of up front stamp duty, you want an investment that pays out if land prices stall or fall. That is likely to be a deflationary environment, so cash or bonds would be good.

          I don’t think any of this is sensible for your home, and is probably over doing it for an investment. Hedges are only meaningful when markets swing wildly when your timing is fixed - you can’t put off harvesting your crop 6 months, so you hedge the risk of a bad price.
          If it is a bad price to sell your home, you just wait. So both the opportunities to hedge against unfavourable market movements is hard, and often not necessary.

  • mskeggs on 04/12/2020 - 22:45
    +3

    I don’t think this should be a big consideration for your own home. It is pretty likely to be neutral in dollars for the average person (moving every 6-7 years) and is really not a lot of money in the scheme of million dollar transactions.

    Focus instead on capturing benefits now (your wife wants the house) versus possible issues/benefits in future.

  • Quantumcat on 04/12/2020 - 23:10
    +3

    If you are planning to live there for many years then stamp duty is a no brainer. Pay once, then done and dusted forever.

  • elgrande on 04/12/2020 - 23:26
    +1

    If the Mrs wants to buy now, even if the stamp duty was $200k, its worth it to avoid the nagging rights..

    • onetwothreefour on 05/12/2020 - 00:22
      +3

      avoid the nagging

      Impossible.

      • SF3 on 05/12/2020 - 00:32

        OP may not have been married long, could still be in “honeymoon” period.

        • Flynny on 05/12/2020 - 07:49

          Wrong guess mate, I mentioned about kids in my post :)

      • Flynny on 05/12/2020 - 07:55

        Spot on :)

    • Flynny on 05/12/2020 - 07:59

      Very interesting

  • Trying2SaveABuck on 05/12/2020 - 00:08
    +2

    If you plan on holding the property for longer then 7 years i would buy it now.

  • djkelly69 on 05/12/2020 - 07:30
    +2

    I thought it was only in consultation/consideration at this point? So no guarantee it will even come in, or when, or what it will be exactly if it does?

    Also FYI the ACT is phasing out stamp duty (a little different to the NSW proposal) and it is over a 20 year period, but may give some indication of timeframe.

  • RockyRaccoon on 05/12/2020 - 07:32
    +1

    This is a proposal, it’s not law.

    I doubt whether it will be implemented within a year or even more.

    There will be arguments and political fights for some time. Even then if all the real issues are resolved, some politics will still come into play.

    Like all changes there will be winners and losers.

    I like some others think it has merit, but devil will be in details and again political expediency.

    SO if you are in market to buy now, the real issue will be IF you think prices will rise or fall over the next 12-24 months and if, that will offset the stamp duty impact.

    • Flynny on 05/12/2020 - 07:52
      +1

      Cheers mate,

      well, IMO, the house prices are not impacted by virus. so I don't think it will rise/fall immediately. Appartment prices may fall, as I see a lots of them are on sale but not getting sold.

      • davethehandyman on 05/12/2020 - 23:31

        Which state are you in mate? I am seeing properties are cleared at historic rate via auction and sold with absurd prices since November…

  • RM on 05/12/2020 - 07:58
    +1

    When the stamp duty is waived, property prices will go up accordingly. Might as well buy now

    • Flynny on 05/12/2020 - 08:02

      One other thing to look at it is —>

      $40,000 stamp duty is taken off from my deposit.
      LMI on $40,000 say around $8,000.

      So this can be added back to my deposit, if I get to pay only Property tax per year

  • Sweet3st on 05/12/2020 - 11:01

    I wonder if properties that are covered by stamp duty rather than land tax won’t eventually command a higher price? As land tax works out more expensive in the long run. I could be wrong but my understanding is that once the property is valued under land tax there’s no going back to stamp duty.

    • mskeggs on 05/12/2020 - 13:11
      +1

      You can bet once the majority of properties are land taxed, they will make it a requirement when the remainder change hands. There will be a situation in 50 years when the last few untaxed properties become taxed when their original
      owners die.

  • WreckTangle on 05/12/2020 - 11:53

    It’s only a proposal. Might not pan out.

    • Flynny on 05/12/2020 - 20:01

      looks like they will implement it

  • Euphemistic on 05/12/2020 - 16:41
    +3

    Buy when you find the right house. No point holding off on a really nice house to skip stamp duty and then missing out.

    • Flynny on 05/12/2020 - 20:00

      thanks

    • lordra on 06/12/2020 - 01:55
      +1

      This.
      Plus to keep the missus happy. You'll never have to hear 'you made me settle for 2nd best just because you wanted to save some money' or 'this is broken and it's your fault because I didn't get the house I wanted'.
      Plus, once the market bounces back early next year (strong indicators atm) you'll be ahead of the game. If you can get eh FHB scheme, plus the free stamp duty that the government offers you, then go for it!

    • qtvinsta on 08/12/2020 - 19:56
      +1

      Agreed! That home you found might not be available any more if you wait until next March to put a deposit on it

  • mini2 on 10/12/2020 - 10:07
    +2

    I reckon any savings found will vanish by everyone thinking oh I've suddenly got another $x at my disposal, I gotta bump up my offer!!!!!!1111

    Might as well pull the trigger now.

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