You may have heard of the recent changes to NSW Stamp Duty for first home buyers. Here’s a breakdown of the changes.
 
First home buyers in NSW who purchase a property up to $1.5M in value can now choose to pay an annual property tax instead of stamp duty (lump sum). The property tax is only payable by the first home buyers that choose to do so. It will not apply to any subsequent purchases of a property.

The annual property tax payments will be based on the land value of the purchased property. The property tax rates for 2022-23 and 2023-24 will be:

• $400 plus 0.3 per cent of land value for properties whose owners live in them.
• $1,500 plus 1.1 per cent of land value for investment properties.

These rates will be indexed each year from 2024-25. Year to year growth on individual property tax payments are capped at a maximum of 4%.

Note that the existing stamp duty concessions for properties up to $800,000 will continue.

Eligibility:

• you must be an individual (not a company or trust).
• you must be over 18 years old.
• you, or at least one person you’re buying with, must be an Australian citizen or permanent resident.
• you or your spouse must not have previously:
• owned or co-owned residential property in Australia.
• received a First Home Buyer Grant or duty concessions.
• the property you are buying must be worth less than or equal to $1.5 million.
• you must move into the property within 12 months of purchase and live in it continuously for at least 6 months.
• you must sign the contract of purchase on or after 11 November 2022
• Transitional rules: Until 15 January 2023 buyers will be required to pay duty and apply for a refund once the scheme commences on 16 January 2023.

Examples:

Jessica and Matthew

• Jessica and Matthew are buying their first home, a $650,000 house in Mudgee, with a land value of $340,000.
• Ordinarily, stamp duty on a $650,000 home would be $24,340, but because Jessica and Matthew are first home buyers, they are exempt from stamp duty and therefore do not choose the annual property tax.
• In 2022-23, the annual property tax on the house would be $1,420, if Jessica & Matthew had opted for the annual property tax.

Aisha

• Aisha is buying her first home, a $750,000 apartment in Concord. The apartment has a land value of $270,000.
• As an eligible first home buyer, Aisha qualifies for a concessional rate of stamp duty which in this case results in stamp duty of $20,727.
• In 2022-23, the annual property tax on the apartment would be $1,210.
• Aisha is hoping to upgrade to a larger home in about five years and thinks she will end up paying less tax under the property tax option.
• She chooses to pay the annual property tax.

Rinaldo

• Rinaldo is buying his first home, a $1.2 million townhouse in Newcastle. The land value of this property is $720,000.
• Stamp duty on this purchase is $50,200, and the purchase price is above the threshold for any first home buyer stamp duty concessions.
• In 2022-23, property tax on the property would be $2,560.
• Rinaldo is not sure how long he will own the property, but he has heard that half of all owner-occupiers sell their property within about ten years.
• Not having to pay stamp duty would really help to lower the up-front costs of the purchase, so Rinaldo chooses to pay the annual property tax.

Please go to the NSW Government website for more information or contact us.