BUYERS BEING SLUGGED WITH BIGGER STAMP DUTY BILLS

Over the past four decades, there's been a big increase in stamp duty costs relative to the price being paid by buyers.

 During that time, Sydney buyers have seen their stamp duty bill increase from a rate equivalent to 2.0% of the purchase price to 4.0%, according to joint research by PropTrack and the e61 Institute. Stamp duty costs have also risen from 2.0% to 5.4% in Melbourne, 1.0% to 2.6% in Brisbane and 2.5% to 4.6% in Adelaide.

 PropTrack Senior Economist Angus Moore pointed the finger at ‘bracket creep’, which happens because stamp duty rates are progressive (i.e. more expensive properties are charged higher rates of stamp duty).

“Each bracket pays stamp duty equal to the amount that a home just below the bracket pays, plus a higher 'marginal rate' for every dollar the purchase price exceeds the bracket threshold. These marginal rates get higher with each successive dollar,” he said.

“This structure of higher marginal rates kicking in as the sale price crosses a particular threshold means that average tax rates – the stamp duty paid divided by the purchase price – increase as the price increases."

 Bracket creep wouldn't happen if state governments kept raising stamp duty tax brackets at the same rate as property prices. But because this hasn't occurred, stamp duty has become relatively more expensive.

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