$1 billion stamp duty scandal: REINSW demands refunds as NSW prepares budget

The Real Estate Institute of NSW (REINSW) has escalated pressure on the NSW Government, claiming home buyers may have been overcharged up to $10,000 each in stamp duty over the past four years, with a potential total refund bill approaching $1 billion.

As Treasurer Daniel Mookhey finalises the state Budget this month, REINSW is urging him not to ignore the issue.

REINSW CEO Tim McKibbin says the overpayments stem from incorrect indexation of stamp duty thresholds under the Duties Act 1997. The thresholds are adjusted annually for inflation using Sydney CPI movements, a reform introduced in 2019 to make the system fairer during strong market conditions.

According to REINSW, errors in the application of the indexation formula, particularly from February 2022 onwards, have resulted in higher-than-intended duty brackets. The Institute, supported by expert tax advice and senior counsel, has reverse-engineered the Government’s methodology and estimates the collective overpayment at around $1 billion.

“Someone has to be first,” Mr McKibbin said on Tuesday (9 June).

“The Treasurer cannot bury his head in the sand; if the Government has collected more stamp duty than it should have, it is an error that must be rectified.

“Government says it regularly consults with tax practitioners but as I understand it, this consultation is one-way.

“These practitioners do not get to look under the hood. It is time for complete transparency,” Mr McKibbin said.

He called on the Treasurer to publish detailed calculations for tax brackets between July 2021 and February 2022, clarify what went wrong on 1 July 2021, and detail the methodology used from February 2022 to the present.

Government rejects overcharging claims

The NSW Government has firmly rejected the allegations.

Revenue NSW maintains that it has applied the 2019 Duties Act correctly. In response to earlier reporting, a government spokesperson emphasised that the calculations align with the legislation, and no systemic overcharging has occurred.

This is not the first time indexation issues have surfaced.

In 2021–22, Revenue NSW identified and corrected errors in published adjustable amounts, resulting in some buyers initially paying less duty. No retrospective top-ups were required at the time.

REINSW has highlighted past government errors in property tax administration, including the incorrect application of foreign buyer surcharges that later required retrospective federal legislation and High Court endorsement.

Mr McKibbin argues that governments are “not infallible” and transparency is essential.

Implications for buyers and the budget

A $1 billion refund liability would represent a significant hit to NSW’s finances at a challenging time.

Stamp duty remains one of the state’s largest revenue sources, though collections have softened with higher interest rates and a cooler property market. Last financial year, NSW buyers paid a record $9.8 billion in stamp duty across 228,000 sales.

For individual buyers, potential refunds of several thousand dollars, and possibly interest, could provide meaningful relief, particularly for those who stretched their finances during the post-pandemic buying surge.

REINSW has called for a transparent review and, if warranted, implementation of an efficient refund mechanism.

Broader context on stamp duty reform

The dispute comes amid ongoing national debate about stamp duty’s effectiveness as a tax.

It is widely criticised for discouraging mobility, adding friction to the housing market, and disproportionately affecting first home buyers and downsizers.

NSW has previously explored alternatives, such as the optional land tax scheme for first home buyers introduced under the former Coalition government, though uptake has been modest.

In other states, 2026 budgets have focused on targeted concessions rather than wholesale reform:

• Western Australia extended and expanded stamp duty concessions for off-the-plan and strata developments.
• South Australia introduced relief for domestic violence victims and downsizing seniors.
• Victoria and others continue temporary off-the-plan concessions to support new housing supply.

These measures reflect growing pressure on governments to ease cost-of-living burdens in the property sector without sacrificing major revenue streams.

What happens next?

With the state Budget imminent, the Treasurer faces a choice between providing the transparency REINSW demands, commissioning an independent review, or maintaining the Government’s position that calculations are correct.

Property professionals and buyers will be watching closely.

For experienced investors and agents operating in NSW, the outcome could influence transaction volumes, buyer confidence, and cash flow considerations in coming months.

If refunds eventuate, they may inject unexpected liquidity into the market. If dismissed, the issue is likely to fuel further calls for broader stamp duty reform.