How stamp duty has changed in Australia: bracket creep and the land tax debate

New South Wales did not change its transfer duty brackets from 1986 until 1 July 2019, apart from an additional duty on residential property valued over $3 million introduced in 2004, according to the NSW Budget Statement 2019-20¹. Since 1 July 2019, the thresholds have been indexed each year to the Sydney Consumer Price Index.

Under the scale in force before 1 July 2019, the $4.50 rate for every $100 applied to the value between $300,000 and $1 million, and the $5.50 rate applied to the value over $1 million². For agreements from 1 July 2026, the same two rates start at $387,000 and $1,290,000, respectively, which are 29 per cent higher than the 1986 thresholds³. The rates, from $1.25 to $5.50 for every $100, are the same in both scales.

A Victorian Legislative Council committee found in August 2023 that indexing stamp duty rates could minimise bracket creep, and recommended that the Department of Treasury and Finance regularly review the rates to adjust for it⁴.

Transfer duty was equal to 4.29 per cent of the median price of established house transfers in Sydney in the June quarter of 2026, compared with 3.35 per cent in the June quarter of 2002, at New South Wales general rates⁵.

The share was above 4 per cent in every June quarter from 2020 to 2026. The June quarter of 2022 recorded the highest share among the June quarters from 2002 to 2026, at 4.38 per cent⁵.

In Victoria, the Parliamentary Budget Office estimated that land transfer duty on the Melbourne median house price of around $390,000 in 2008 was $18,470, an effective rate of 4.7 per cent⁴. It estimated duty on the 2022 median of around $930,000 at $50,870, or 5.5 per cent, assuming no surcharge or concession.

What stamp duty costs at $500,000, $750,000, $1 million and $1.5 million in each state and territory is set out in the article on stamp duty costs in every Australian state.

Australia's Future Tax System review, known as the Henry Review, recommended in its 2010 final report that stamp duties, including conveyancing stamp duties, be removed through a switch to more efficient taxes, such as those on broad consumption or land bases⁷. Supporters and critics of that switch have set out their positions in state inquiries and reviews since.

Three arguments are made for replacing stamp duty:

• Stamp duty discourages people from moving house for work or to downsize, a finding of the Victorian committee in 2023⁴.
• Stamp duty is paid only by the share of the community that buys property in a given year, and its revenue depends on the property market, according to the ACT Revenue Office, which describes rates as a broad-based land tax and a stable source of revenue⁸.
• Stamp duty's economic cost is high, according to Australian Treasury modelling reported by the Productivity Commission in 2017. The modelling estimated that each additional dollar of stamp duty reduced household living standards by 72 cents in the long run⁹.

Four concerns are raised about a switch:

• Recent buyers could pay both stamp duty and a new land tax during a gradual transition, which the Victorian committee described as a risk of double taxation⁴.
• The Victorian Farmers Federation told the committee it had strong reservations about a broad-based land tax on farmland⁴.
• The Productivity Commission identified cash-flow concerns for low-income retirees living in high-value family homes, and pointed to deferring payment until sale as one option¹⁰.
• Consultation in New South Wales raised concerns about unpredictable tax bills and a temporary fall in government revenue during a transition⁴.

Across all states and territories, land tax revenue increased in every year from 2016-17 to 2024-25, rising from $7.2 billion in 2015-16 to $20.0 billion in 2024-25⁶. Over the same period, conveyance duty revenue fell by 13.4 per cent in 2018-19 and by 20.0 per cent in 2022-23.

How land tax works in each state and territory, and who pays it, is covered in the article on land tax in Australia.

The Productivity Commission reported in 2017 that one Australian study found a 10 per cent increase in stamp duty lowered housing turnover by 3 per cent in the first year, and by 6 per cent if sustained over three years⁹.

The Commission also cited a study from the United Kingdom, where an 8 per cent increase in property transactions followed a 16-month suspension of stamp duty on lower-value transactions⁹.

The Reserve Bank of Australia reported in 2017 that the rate of housing turnover had trended lower since the early 2000s, partly because households were moving less often and fewer owned their homes¹⁵. The same article noted that Australian data had not shown strong evidence that transaction costs reduced household mobility.

The Grattan Institute described rising stamp duty rates as a likely material factor in national housing turnover falling from 8 per cent a year in the early 2000s to below 5 per cent¹⁶. It also noted that an ageing population and lower interstate migration could have reduced turnover.

For older Australians, the Productivity Commission found in 2015 that stamp duty is a potential impediment to moving out of the family home, but that surveys indicate it is a relatively minor factor compared with the supply of suitable housing and a strong preference to avoid moving¹⁰.

The ACT Treasury's analysis of the territory's reform found that residential property turnover increased following the duty cuts¹¹.