Stamp Duty Changes: Can first home buyers fast-track home ownership?

26-02-2023    |    Resource   |   Brent Jones

An important change to legislation regarding stamp duty in New South Wales came into force in January this year that could allow first home buyers to purchase a property earlier.  With interest rates and inflation rising, it pays to understand the various assistance options available to you as a first-home buyer and to know whether you may be able eligible.

In general, you are considered to be eligible for first home buyer assistance packages if you over the age of 18 years and you (and your spouse/partner if you are purchasing a home together) have not owned or co-owned property before, or received any other first home buyer’s grant or concession in the past. At least one of the purchasers must also be an Australian citizen, and you must occupy the property as your principal place of residence

Some of the options now available from the NSW Government for first home buyers include:


First Home Buyers Assistance Scheme

If you are a first home buyer, you may be entitled to a concessional rate of stamp duty (also known as transfer duty) or even an exemption from paying it altogether under the First Home Buyers Assistance Scheme

This Scheme applies to purchases of an existing home, a new home or vacant land that you intend to build a home on.  A full exemption from stamp duty may apply to purchases of a new or existing home under $650,000.00.  If the purchase price is between $650,000.00 and $800,000.00 there is a concessional rate of stamp duty to be paid.


First Home Owner Grant

As a first home buyer in NSW, you may also be eligible for a payment of $10,000 to assist with the purchase under the First Home Owners Grant.  To be eligible for the payment, you must be buying or building a new home that no-one has lived in before, and the property (including land) must be valued at less than $750,000.


First Home Buyers Choice

In one of the most significant stamp duty reforms in recent times, as of 16 January 2023, eligible first home buyers can now choose between paying stamp duty on the purchase of their first property or paying an annual property tax based on the value of the property.  Choosing to pay the annual property tax instead of stamp duty means that first home buyers can significantly reduce the amount required to purchase a property upfront. 

Currently, the property tax option is $400 plus 0.3% of the land value for first home buyers who are purchasing a property to live in (which means that they must move into the property within 12 months of completing the purchase and live in the property continuously for six months). 

While the scheme is still available to investors, the annual property tax rate for first home buyers purchasing an investment is currently $1,500.00 plus 1.1% of the value of the property, which is significantly more.

The NSW Government has created a short video to help prospective purchasers understand the First Home Buyer’s Choice scheme. Click here to watch the video and find out whether you are eligible. 

There is also a Property Tax Calculator available on the Service NSW website to help you calculate the amount of tax versus stamp duty that you would be paying.

Importantly, if you are a first home buyer who signed a contract between 11 November 2022 and 15 January 2023 you can still choose to opt in to the scheme anytime up to 30 June 2023.  If settlement occurred before 15 January 2023 and you have already paid the stamp duty, you can apply for a refund of the amount paid.

To take advantage of this scheme the purchase amounts are capped at $1.5 million for a newly built or existing home, and $800,000 for land purchased with the intent to build on it.


Shared Equity Home Buyer

The NSW Government recently introduced the Shared Equity Home Buyer scheme for eligible participants that sees the government contribute a proportion of the purchase price of a property in exchange for an equivalent interest in the property.  The maximum amount of contribution will be up to 40% for a new home, and up to 30% for an existing home.

Strict eligibility requirements apply to this scheme and must be maintained in order for the government to contribute financially.  To find out more click here.


First Home Guarantee

The First Home Guarantee is a Federal Government scheme that allows purchasers to buy a new or existing home with a deposit of 5% without having to pay Lenders Mortgage Insurance.  Administered by the National Housing Finance and Investment Corporation (NHFIC) on behalf of the Federal Government, the remaining 15% of the deposit is guaranteed by the government.  The scheme is subject to a variety of terms and conditions and limited to a set number of places (35,000) each year.


Speak to the Lamrocks Property Team

If you are a first home buyer considering your options, the property team at Lamrocks can guide you through the purchase process and ensure the transaction runs smoothly.  We can also discuss the various government assistance options that might be available and help you to navigate what can be a complex and confusing process.  Call us now on 02 4731 5688.


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