First-home buyers in New South Wales are now able to choose between paying an annual land tax or a one-off stamp duty levy after the tax reform measure passed parliament on Thursday (10 November). The legislation gives first-home buyers the option to pay an annual tax on all properties up to $1.5 million.
Stamp duty receipts are down 7 per cent over four months, reflecting the fall in Sydney property prices.
Analysis by the NSW Treasury submitted to Parliament earlier this month revealed that two-thirds of first-home buyers will opt against paying stamp duty, with further research indicating that up to 80 per cent of home sales could benefit from the scheme. Over the next four years, the NSW government has allocated $728.6 million to the First Home Buyer Choice scheme.
To learn more about NSW new land tax policy, first home buyer choice, or others, click here.
Example:
Sam buy an apartment for $750,000. The property has been calculated to have a land value of $270,000. If you’re an eligible first home buyer, you’ll need to pay concessional stamp duty of $20,870.
In 2022-23, the annual property tax on the apartment would be $1,210. If you intend to upgrade to a larger home in the next five to ten years, you might take up the First Home Buyer Choice as this tax option may save you money, even though you qualify for other first home buyer tax concessions.
If you buy a property from somebody who is paying the annual land tax, you will not be subject to the property tax – unless you’re also an eligible first home buyer and choose to adopt the scheme.
Eligibility:
To be eligible:
- 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
Reference:
API Journalist Established in 1997 (2022) NSW first-home buyers can now choose between stamp duty or a land tax – latest tax news – API magazine, Australian Property Investor Magazine. Australian Property Investor Magazine. Available at: https://www.apimagazine.com.au/news/article/nsw-first-home-buyers-can-now-choose-between-stamp-duty-or-a-land-tax (Accessed: November 17, 2022).