The NSW government has announced some relief for first home buyers in the 2022-23 NSW State Budget, via a multi-billion-dollar housing package intended to increase housing affordability for first home buyers.
From 16 January 2023, NSW first home buyers will have the option to either pay stamp duty upfront or an annual property tax of $400 plus 0.3 per cent of the land value of the property being purchased – on purchases of property up to a value of $1.5m or vacant land up to $800k.
How does that compare?
|
Purchase price of $700,000 |
Upfront stamp duty |
Annual property tax (estimate based on $400,000 land value) |
|
Stamp duty |
$10,435 |
$400 + $1,200 = $1,600 per annum |
The benefit of the scheme could come down to the purchaser’s intent with the property. If they intend to retain the property long term, paying stamp duty upfront may be the more beneficial option. If, however, they only intend to hold the property for five years for example, before selling and upgrading, opting to pay the annual property tax may be more cost effective.
The property itself will not be locked into the annual property tax method if it is sold – only the initial purchaser. Future owners will not be subject to the property tax unless they are also an eligible first home buyer who chooses that option at the time of purchase.
First home buyers will not be eligible for the annual property tax option if they have ever received a First Home Buyer Grant or duty concession.
The scheme will be introduced during the second half of the 2022 calendar year, with first home buyers able to apply for the property tax option from 16 January 2023. Those who are eligible - and have entered into a purchase contract between enactment of the legislation and 15 January 2023 - will be able to opt-in from 16 January 2023 and receive a refund of stamp duty already paid.
We will update this article in coming weeks as the full terms, conditions and eligibility criteria are released by the NSW government. In the meantime, contact our team if you wish to discuss further and read BDO’s expert analysis of the 2022-23 NSW State budget.
Matthew Laming is an authorised credit representative 478711 of BLSSA Pty Ltd (ACN 117 651 760) Australian Credit Licence 391237. BDO Finance Solutions (SA) Pty Ltd Corporate Credit Representative Number 478582. Aggregation services provided by Choice Aggregation Services. © 2022 BDO Finance Solutions (SA) Pty Ltd. All rights reserved. Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.