Abolition of stamp duty tipped to boost investor spending

The imminent abolition of stamp duty on commercial property valued at less than $1.5 million is expected to boost investor spending in Canberra’s fringe precincts.

In delivering his budget this month, Chief Minister Andrew Barr announced stamp duty reductions for both the residential and commercial sectors.

JLL ACT’s head of sales and investments, Michael Heather, says the move will boost investment in the retail and office markets and attract more interstate buyers with a tax breather not offered in their jurisdictions.

“It’s really positive news for a large number of commercial property investors in Canberra and beyond looking at acquiring sites under this amount,” Heather says.

“Properties that are typically in this value range are retail, office and industrial strata units, and freestanding properties in the fringe commercial precincts particularly Fyshwick, Mitchell and Hume as well as properties located in Neighbourhood Centres and Group Centres.”

The ACT will remove stamp duty for all commercial transactions under $1.5 million, by halving rates in 2017-18 and removing it entirely from July 1, 2018. It is estimated about 70 per cent of commercial transactions will not be liable for duty from July 1, 2018.

For properties above that value, a flat rate of 5 per cent stamp duty applies and the government has says that rate would continue for at least five years.

Meanwhile, residential conveyance duties will fall in the next six years across all price brackets.

Housing Industry Association ACT executive director Greg Weller says the territory is leading the nation on property tax reform.

“HIA has been very supportive of the government phasing out stamp duty,” Weller says.

“If the ACT is trying to attract people here to take up new opportunities, reducing  stamp duty, whether it’s on residential or commercial properties, is a pretty amazing incentive.”

Weller described the government’s shift of revenue raising from stamp duty to rates as a bold and more equitable system.     

“There is a lot of talk around tax reform at state and federal levels and no one has really done anything. Popular or not, at least the ACT is shaking up the way tax is collected.

“It’s a very brave bit of tax reform and I think both the residential and commercial sectors will really benefit.”

In other changes announced in the budget, commercial rates are expected to rise on average by 6 per cent each year.