Perrottet’s flagship land tax to go as Minns introduces stamp duty reform

The NSW government will introduce legislation ending the state’s short-lived optional land tax for first home buyers when parliament resumes this week, setting up the first major fight of the new term as it seeks to repeal one of former Coalition premier Dominic Perrottet’s flagship reforms.

Housing affordability has quickly become a key challenge for the new Labor government with voters identifying rising rental costs as a key concern, and high interest rates putting increased pressure on homeowners.

The Coalition scheme introduced an optional annual land tax on homes valued up to $1.5 million.Credit: Flavio Brancaleone

With parliament set to resume on Tuesday, the government will seek to convince the expanded crossbench to support its promised stamp duty exemptions for first home buyers while repealing one of Perrottet’s key legislative achievements.

The new scheme will mean stamp duty exemptions for first home buyers will be lifted from $650,000 to $800,000, and stamp duty concessions from $800,000 to $1 million.

The scheme was a key flashpoint in the March election after Labor promised to scrap Perrottet’s cherished First Home Buyers scheme.

Despite being derided by Labor as a “tax on the family home” the policy has proven more popular than first envisioned by Treasury under the former government. Revenue NSW data shows 4842 homeowners have used the scheme since it was introduced, including more than 1000 buyers who have taken up the scheme in the past month.

Victorian Premier Daniel Andrews has also flagged a possible move to an optional land tax model.

But Premier Chris Minns has argued the government’s stamp duty exemption scheme is a simpler and fairer policy, and will see more people pay no-upfront tax on their first home purchase.

“I understand the stress of trying to purchase your first home. I want more singles, couples and families realising this dream,” he said.

“Under Labor any property purchased under $800,000 will have absolutely no stamp duty, and any property purchased up to $1 million will have a reduced rate.”

Labor will seek to repeal former premier Dominic Perrottet’s land tax reform when parliament resumes this week.Credit: NCA NewsWire

The Coalition scheme introduced an optional annual land tax on homes valued up to $1.5 million, meaning those entering the property market since January 16 have been able to avoid paying stamp duty.

The legislation will see the land tax scrapped from 1 July, but will include grandfathering provisions so that first home buyers who opted in to the annual property tax can continue to pay that tax until they sell their property.

But the fight to save the optional land tax has already been marked out as a key legislative priority for Opposition Leader Mark Speakman, who has argued there is a “collective mandate” between the Coalition and the expanded crossbench to block its repeal.

While some economists have warned increasing stamp duty exemptions will push house prices up, Treasurer Daniel Mookhey said targeting the policy at first home buyers would mean help was given to those “most at risk of leaving the housing market altogether as interest rates go up”.

“More first home buyers will pay no tax under Labor’s scheme instead of a land tax,” he said.

“The new thresholds for stamp duty exemptions and concessions are a simpler and fairer way to help more first home buyers than the property tax, which helped a smaller cohort of first home buyers.”

As parliament resumes for the second week of sitting under the new Labor government, Industrial Relations Minister Sophie Cotsis will also announce a review into safe workplace laws after a series of industry codes were found to be decades out of date.

Cotsis will on Monday announce a taskforce to review 20 industry safety codes, including some which cover the state’s timber and minerals industries which are more than 30 years old.

The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.