Changes to NSW stamp duty explained: What it means for first home buyers
As of January 16, property buyers in New South Wales who are seeking to spend under $1.5 million on their first home, can now opt to pay an annual land tax as opposed to the upfront cost of stamp duty.
The First Home Buyer Choice scheme, will also apply to those who signed a contract of purchase between 11 November 2022 and 15 January 2023. For this group, applications to choose the property tax can be made at any time between 16 January 2023 and 30 June 2023.
If settlement occurs on or before 15 January 2023, they will need to pay stamp duty, and then will be able to apply for a refund of the stamp duty from 16 January 2023.
If settlement occurs on or after 16 January 2023, and they have chosen property tax, they will not need to pay stamp duty.
For those who are purchasing land with the intention to build their first home, the price cap will be up to $800,000.
The aim of the scheme is to remove a significant barrier impacting first home buyers entering the property market.
Analysis by Canstar showed that the number of owner-occupier first home buyer loans is over 31.3 per cent down over the 12 months to November, after numbers retreated a further 5.5 per cent over the month.
For a $1.5 million purchase in New South Wales, buyers would be expected to pay $67,000 in stamp duty, which is in addition to a minimum 10 per cent deposit, a total of over $210,000 upfront with both costs before taking ownership of the property.
Annual property tax payments are based on the land value of the purchased property. The property tax rates for 2022-2023 and 2023-2024 will be $400, plus an additional cost of 0.3 per cent of land value.
Castle Island, Castle Hill
Premier Dominic Perrottet said this choice will empower first home buyers as they head out to auctions and inspections over the weekend.
“Starting today, first home buyers will get a huge boost with a system that helps rather than hinders their journey to owning their first home,” Perrottet said.
“The opportunity starts now, with buyers able to choose the option that will suit their own financial circumstances and see them come out ahead in the long run.”
Treasurer Matt Kean said more than 6,000 first home buyers are estimated to choose the annual property fee each year.
“This is about giving home hunters the chance to decide what works best for them. It will give people greater flexibility as they approach one of the biggest investment decisions most will make in their lifetime,” Kean said.
“Home ownership builds economic security, financial independence, personal freedom and offers people a stake in our nation. This reform will bring thousands of people closer to that dream, sooner.”
The First Home Buyer Choice is a key component of the Government’s $2.8 billion Housing Package announced in the 2022-23 NSW Budget.
For more information visit the NSW Government website here.