From next year, some first home buyers in NSW will be able to choose between paying the lump sum of stamp duty or an annual land tax.
While first homeowners will be the only immediate beneficiaries, NSW Treasurer Matt Kean was not shy about voicing ambition to extend it.
"This is the first step in making sure that we start testing the waters for tax reform in New South Wales," said Mr Kean.
Under the plan first home buyers purchasing a property up to $1,500,000 can opt to pay an annual fee of $400 plus 0.3 per cent of the land value.
For example, buying a $1.35m house, with a land value of $810,000, the stamp duty would be $59,125.
But if a buyer is holding on to the property for less than 20 years, they are better off paying the $2,830-per-year land tax — which would total $56,600.
For apartments, the deal is better because land value is less.
An $830,000 apartment, with a $265,000 land value, would require an up-front payment of $32,440 stamp duty, or the buyer could pay $1,195-per-year land tax.
For Ryan Dalusag, who is both a real estate agent and a prospective first home buyer, the plan to replace stamp duty with land tax has merit.
"Being spread out over a longer period of time it helps me personally, not having to put up as big deposit," Mr Dalusag said.
"After hearing the announcement today, I find that it's a little more doable, achievable to secure a property."
Why does the state government want to get rid of stamp duty?
"For most first-time buyers, the biggest challenge is getting that initial deposit together," Ray White chief economist Nerida Conisbee said.
"If a first-time buyer doesn't need to pay $20,000-$30,000 in stamp duty to buy their first home, it allows them to get in a bit earlier and certainly with a much smaller deposit."
But it will cost the NSW government a lot of money to make changes to stamp duty, which is a key stream of revenue.
"It's a big revenue earner, it accounts for around a quarter of total revenue for the state government," Ms Conisbee said.
"Moving to a land tax system will take a lot of work, for people to get used to paying an annual land tax and for the government coffers to get used to less revenue."
Despite stamp duty being a good revenue raiser, it is not good for much else, according to Property Council NSW executive director Luke Achterstraat.
"Stamp duty is volatile, it's inefficient, it actually traps people in their homes," he said.
"People feel they've made a really significant cost to purchase a property, so stay in their homes for longer than really is appropriate.
Mr Achterstraat says stamp duty is a "triple threat" that is bad for home ownership, household mobility and jobs.
"What the government's done today is put a bit of a stake in the ground and say we're going to trial this change."
Who doesn't support the change?
The land tax option will save some first home buyers money, particularly those who do not want to stay in the same house for a long time.
However, NSW Labor say there are better ways of supporting home buyers, including extending the stamp duty concessions.
The NSW government has extended the stamp duty exemption for properties under $650,000 and reduction for homes before $800,000.
"If you're going to put money on the table for first home buyers, why introduce a brand new land tax system for New South Wales when we've never had one before, rather than just extending the exemptions to allow people to pay no land tax at all," Opposition Leader Chris Minns said.
Social services and community housing advocates are also disappointed that there was not more in the budget for vulnerable people.
"There are more than 50,000 households on the social housing waiting list in New South Wales," Caitlin McDowell, from the Community Housing Industry Association said.
"Some of these people wait 10 or more years to be housed.
"The New South Wales government has committed to build just 320 new social homes over the next 12 months, that is an absolute outrage."
