November 2008

Mini-Budget 2008-2009 Additional costs for property owners

In presenting the NSW mini-budget on 11 November 2008 the New South Wales Treasurer said \"We have crafted a tough, decisive and detailed mini-budget demanded by the times in which we live\".

This bulletin is not a critique or a detailed analysis of the mini-budget but identifies some areas where property owners may face additional costs.

Deferred Abolition of Mortgage Duty

Mortgage duty has previously been abolished for individuals taking up mortgages on both owner occupier and investor residential properties. Mortgage duty over other types of security properties was to be abolished from 1 July 2009. Along with two other types of duty which were also to be abolished (for example duty on business loans) the mini-budget defers removal of the remaining mortgage duty until 1 July 2012.

Land Tax

The mini-budget introduces a two tier process for the assessment of land tax payable.

From the 2009 Land Tax Year (which is based on taxable land value of properties owned in New South Wales as at midnight 31 December 2008) land tax payers will be liable to pay land tax at the rate of 1.6% on the value of their property above the tax free threshold of $368,000, up to $2.25 million. The mini-budget introduces a marginal rate of 2% of taxable land value to apply to land tax payers for that part of their taxable land holdings above $2.25 million.

The $2.25 million value will be indexed each year in line with the land tax threshold.

The mini-budget paper says this measure will affect around 8,500 land tax payers being approximately 5.6% of the total number of land tax payers.

Nominal Duties

To raise anticipated additional revenue of $6 million each year, the mini-budget increases various nominal duties including duty on counterparts of documents on which stamp duty has already been paid from $2 to $10 and from $200 to $500 for change of trustees.

The increases will apply from 1 January 2009.

Parking Space Levy

The parking space levy was introduced to discourage car use in major commercial centres. Originally it applied to Sydney CBD and North Sydney/Milsons Point. In 2002 the area was extended to include Bondi Junction, Chatswood, Parramatta and St Leonards business areas.

The mini-budget provides that from 1 July 2009 the parking space levy per off-street non residential parking space will increase:

  • from $950 to $2,000 a year in Sydney CBD, North Sydney and Milsons Point; and
  • from $470 to $710 a year in the business areas of Bondi Junction, Chatswood, Parramatta and St Leonards.

Existing exemptions remain for parking spaces used exclusively for retail, hotel motel, club, restaurant and medical centres in Bondi Junction, Chatswood, Parramatta and St Leonards.

In 2008-09 parking space levy collections are estimated by the Department of Transport to be $47 million. The mini-budget papers say that the amended levy is expected to increase revenue by about $58 million per annum.

Transfer Lodgement Fee

Tucked away on page 8 of Appendix \"A\" of the mini-budget papers is detail of an increase in Land and Property Information NSW lodgement fees payable on Transfers. Effective 1 January 2009 the lodgement fee on a Transfer rises from $92 to $184.

There is nothing in the budget papers to indicate a present intention to increase the lodgement fee on other dealings such as Transfer Granting Easements, leases, mortgages etc. Usually Land and Property Information NSW increases its fees at the start of each financial year. It remains to be seen whether the amount of increase in lodgement fees for Transfers will influence the amount of fees to be charged on all other dealings.

Peter Cahill