The NSW opposition is accusing the state government of using the federal budget as cover to sneak through a new property tax.

NSW Lands Minister Tony Kelly announced in parliament on Wednesday that the government will introduce new charges on transfers of properties valued at more than $500,000, as part of a plan he says will prevent fraud.

Ad valorem fees of 0.2 per cent will be charged for properties worth between $500,000 and $1 million, and 0.25 per cent for properties valued above $1 million.

However, the first $500,000 will be fee free, making the payment on an average Sydney home of $600,000 about $200.

“The new security measures will strengthen land title examination processes and will include an additional six authentication measure such as a new watermark and a security trust seal tailored specifically for certificates of title,” Mr Kelly said.

The NSW opposition immediately seized on the announcement, accusing the government of trying to sneak through the new tax before next month’s Penrith by-election.

“This is an attempt under the cover of a federal budget to get some bad news out from the state budget, well away from polling day in Penrith,” he said.

“This is a tax on homebuyers, this is a tax that is going to hurt the property market.”

Shadow treasurer Mike Baird says claims the scheme will prevent property fraud are “complete spin”.

“Whatever way you dress this up, it is not Cinderella at the ball, it is an ugly dirty tax,” he said.

“Whatever way they try to do it, it will not hide the fact that this is a tax on homes, it’s a stamp duty by any other name.”

Premier Kristina Keneally defended the changes in question time, saying “70 per cent of property registrations will remain unaffected by the ad valorem charges”.

“Western Australia, Victoria, Queensland and South Australia all have ad valorem fees on transfers,” she said.

“The proposed ad valorem rates maintain NSW as middle ranking in government land transfer charges.”

If passed by parliament, the new charges would come into affect in July.

The fees are expected to raise about $90 million annually.