First Home Buyer Choice

Changes to the NSW property tax system give first home buyers the choice between paying an annual property tax or stamp duty. Thousands of first home buyers can now fast track their home ownership dreams after the Perrottet Government’s landmark legislation received royal assent.

Treasurer Matt Kean said the new program signed into law today would help thousands of young people and families shave about two years off the time needed to save for a deposit.

“Young families can save thousands in the long run by opting for the annual payment, with Treasury estimating about two-thirds will choose this because of the financial benefit,” Mr Kean said.
 

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.

Access First Home Buyer Choice Calculator below:

More examples
Kate and Arnold

• Kate and Arnold are buying their first home, a $650,000 house in Bathurst, with a land value of $340,000.
• Ordinarily, stamp duty on a $650,000 home would be $24,340, but because Kate and Arnold 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 Kate and Arnold had opted for the annual property tax.

Lyla

• Lyla 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, Lyla 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.
• Lyla 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.

Andrew

• Andrew is buying his first home, a $1.2 million townhouse in Central Coast. 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.
• Andrew 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 Andrew chooses to pay the annual property tax.

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. 

If you're a first home buyer looking to take a hold of this opportunity, give us a call! 
The Addisons Team are here to help!