The week has gotten off to a flying start for Eckermann Conveyancers with South Australian Treasurer, Tom Koutsantonis, announcing that the stamp duty cuts will take effect in South Australia earlier than planned. As of yesterday, stamp duty will be reduced on transfers of non-residential, non-primary production real property. This is almost seven months earlier than planned.
As I’ve been demonstrating here for a while, the reason clients are always better off with established, larger conveyancing firms like ours is that we have the resources to respond quickly to changes like these.
Why has stamp duty been cut?
It follows a poll by the Property Council that two thirds of South Australians wanted stamp duty abolished. The State Government also began to already phase out stamp duty on the sale of business properties. Learn more: South Australian State Budget 2015: A conveyancer’s review in relation to property.
Potential stamp duty savings for businesses
According to the Advertiser article, Treasurer Tom Koutsantonis forecasts $355m surplus, brings forward business tax cuts in Midyear Budget Review, the treasurer says this first cut to stamp duty will be significant.
Estimates show these cuts will save more than $181,000 on a $10 million sale.
These cuts were meant to start on July 1 next year. Instead, the next cut of another third will happen in July 2017 with the final third happening in July 2018.
Benefits for residential buyers and sellers
By reducing the cost of stamp duty, a large cost (of an already costly transaction) is reduced.
For example, it costs approximately 2-3% of the sale price of an existing property in selling fees and approximately 3-5% of a purchase price in purchasing fees just to sell. This creates a substantial barrier to property “change-over”.
We know from our work with clients around South Australia that these costs result in many people holding onto properties they don’t like, even staying in areas they don’t like, because it is too expensive to move. By reducing stamp duty, more property owners would be motivated to move.
First home buyers may also find it easier to buy with the stamp duty reduction, and there may be a higher turnover of property investors.
These cuts aren’t for everyone: Make sure your conveyancer gets it right
In our briefings with staff at EckermannConveyancers, we have distilled the key points while providing detailed background directly from Revenue SA.
Our conveyancers are now equipped to determine which contracts involve the purchase of “qualifying land”, which is land NOT being used for residential purposes or in primary production.
Our staff have been given detailed breakdowns and will be able to advise you if you are in doubt about upcoming transfers of commercial or industrial real estate.
Furthermore, there are important details in the latest bulletin from Revenue SA explaining the details of ensuring the discount is only applied to stamp duty and not from LTO registration fees; they are untouched.