NSW State Budget Defers Abolition of Mortgage Duty

In the 2012 NSW State Budget, the NSW Government announced that the abolition of mortgage duty would be deferred 12 months and will now commence from 1 July 2013.

The NSW Office of State Revenue had previously advised that from 1 July 2012 stamp duty on mortgages would be abolished for advances made on or after 1 July 2012. This would have brought NSW into line with all other States.  NSW remains the only state or territory in Australia which continues to charge stamp duty on mortgages.

Stamp duty on a NSW mortgage is currently levied at $5 plus a further $4 for every $1,000, or part, by which the amount secured exceeds $16,000.

From 1 September 2007 stamp duty on mortgages has not been charged on owner occupied housing when borrowers were natural persons.

From 1 July 2008 stamp duty on mortgages has not been charged if the loan was made for the purpose of investment housing when the borrowers were natural persons. 

These exemptions do not apply where the borrower is a superannuation fund as even if the SMSF Trustees were individuals they are not acting in the capacity of a ‘natural person’ but as a trustee of the fund.

Super funds which had been holding off finalising a limited recourse borrowing arrangement in the hope of avoiding NSW mortgage duty will now have to reconsider their strategy in light of the minimum 12 month delay in the introduction of the abolition.