May 30, 2014 – 10:32PM
Canberra Domain Editor
The ACT government is set to broaden a stamp duty concession scheme aimed at pensioners to all home buyers aged over 60, giving them access to huge cuts.
The “Over 60s Home Bonus” will replace the Pensioner Duty Concession Scheme following the delivery of the 2014-15 ACT budget next week.
From next Wednesday, eligible downsizers will pay as little as $20 for stamp duty for a property worth less than $595,000, and will receive discounts on the duty for homes valued up to $765,000.
Unlike other first home owner assistance programs, limited to new properties, the discounts will
all homes in the territory.
The ACT government will take a predicted hit of $5.3 million in revenue over the next two years as a result of the reduction in stamp duty paid by eligible home buyers.
ACT Treasurer Andrew Barr has also confirmed the government will continue the cuts to stamp duty for all home buyers proposed under the territory’s staged tax reform.
The pensioner scheme was initiated in 2008 to provide incentives to pensioners who found stamp duty an impediment to downsizing.
It has not had the desired effect on encouraging downsizing in the territory with, on average, less than 80 people accessing the scheme each year.
Mr Barr said the scheme had been broadened to provide an incentive to the large cohort of older residents in the territory to downsize and stay in the areas they already lived in.
He said this was the reason the scheme applied to both established and new homes, and was only dependent on the value of the property.
“We don’t want stamp duty to be a barrier to making that transition into a different form of housing,” he said.
“This hits right in the middle of the housing market, and I think that’s an area that needs a little bit of stimulation over the next couple of years.”
Mr Barr said while stamp duty was a highly volatile tax line that fluctuated depending on the state of the market, the government expected to take a hit to the bottom line of about $5 million.
He said there would be a two-year sunset clause on the expanded scheme and the government would reassess it at that time.
The Treasurer anticipated that “hundreds” of downsizers over 60 are likely to benefit from the scheme in each of the two years.
Under the home bonus program, an eligible downsizer will pay just $20 in stamp duty if they buy a property for less than $595,000, or $316,100 for land.
Figures provided by the ACT Treasury show the buyer of a $350,000 home would save $9555 in stamp duty and a buyer of a $550,000 home would save $18,280.
Buyers of properties costing $650,000 would save $13,840 and buyers paying $700,000 would save $7740.
In addition to broadening the scheme to non-pensioners, the government will increase the property price thresholds.
The value at which buyers receive a full concession has increased from $580,900 to $595,000, and part-concession has been raised from $742,000 to $765,000.
The Real Estate Institute of the ACT has welcomed the move to broaden the scheme.
CEO Ron Bell said stamp duty represented about 6 per cent of the purchase price of a home and it was a large impediment to older Canberrans downsizing.
“I think it’s very good news, particularly when we’re seeing the actions coming out of the federal budget,” he said.
Mr Barr said the initiative should free up larger housing stock for families, bringing flow-on benefits to the property market, in particular to housing affordability.
As foreshadowed in previous budgets, the ACT government is phasing out stamp duty over 20 years and increasing general rates to make up for the shortfall in revenue.
According to Treasury figures, from June 4 home buyers will save an additional $600 on a home worth $300,000, and save $1300 for homes valued at $500,000, $750,000 and $1 million.
While Mr Barr would not put a figure on the rates increase to be revealed in next week’s budget, he said it had been determined – under the same policy framework as last financial year – this was an average increase of 10 per cent.
Source : The Canberra Times