New changes to Stamp Duty in NSW could get you into your first home faster!

Among the many costs associated with the purchase of property, is the cost of stamp duty. 

Stamp duty is a tax imposed by the state government on the purchase of land (as well as other assets). It is calculated based on the market value of the property. So, the more expensive the property, the higher the stamp duty. 

There are currently exemptions and concessions from stamp duty for eligible first home buyers purchasing property valued up to $800k. However, for those in need of a larger family home, or those in metropolitan areas, $800k doesn’t always cut it. 

With this in mind, the NSW government has announced a new scheme for eligible first home buyers to choose between a) paying stamp duty up front (the usual method); or (b) paying an annual property tax based solely on the land value. 

Who can apply?

• The new scheme will only be available to eligible first home buyers purchasing property with a market value of $1.5mil. or less. 
• Eligible first home buyers that sign a contract on or after 16 January 2023 will be able to opt in the property tax as opposed to paying stamp duty up front. 
• Eligible first home buyers that sign a contract between the passage of the legislation and 16 January 2023 will be required to pay stamp duty upfront, however, may be entitled to apply for a refund of that duty. 

How much is the property tax?

The property tax will be calculated on the land value solely and issued for the financial year. 

The property tax rates for 2022-2023 are as follows:

• Owner/occupiers: $400.00 plus 0.3% of the land value
• Investors: $1,500.00 plus 1.1% of the land. 

For example. stamp duty on a property valued at $1.2mil would attract stamp duty of $50,875 payable up front. Under the new scheme, the annual property tax for 2022-2023 would be $2,560.

If you are looking to purchase your first home we recommend getting in touch with one of our experienced property lawyers or conveyancers.