NSW to launch stamp duty reform for first home buyers

The NSW state government has announced it will give first home buyers the option to not pay stamp duty and instead pay an annual land tax as part of the 2022–23 NSW Budget.

NSW Premier Dominic Perrottet said first home buyers who opt-in to the property tax will pay an annual property tax of $400, plus 0.3 per cent of the land value of the property, or, $1,500 plus 1.1 per cent of land value for investment properties.

The option of a land tax for the First Home Buyer Choice program is only available on properties worth up to $1.5 million. The changes are due to take effect from 16 January 2023 and the property will not be locked into the scheme if it is sold.

First home buyers will still be eligible to apply for a full stamp duty exemption for properties up to $650,000 and concessions for properties between $650,000 and $800,000. However, they will not be eligible if they have received a First Home Buyer Grant or duty concessions.

Mr Perrottet said the changes are getting put in place to help affordability, with the program expected to assist up to 55,000 people per year. “We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” Mr Perrottet said.

“In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent. Lifting home ownership is part of this Government’s efforts and ambition to help families who are feeling the squeeze.

“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers.”

On a $750,000 property, if you were to elect to pay stamp duty on that property, you pay about $30,000 as an upfront payment. If you elect to pay property tax, you’ll pay around $1,450 every single year. Noting that this amount will be based on the land value each year, and as the value of your land increases, that that tax will increase over time.

Legislation to establish the property tax will be introduced during the second half of 2022, with eligible first home buyers able to apply to opt-in to the property tax from 16 January 2023.

If you need any assistance with purchasing your next property, please contact SJ Mortgage Solutions. Mobile:0401227514; Email: info@sjmortgagesolutions.com.au