In NSW, first home buyers will be able to choose whether they want to pay stamp duty or an annual land tax. This is after the state’s MPs passed legislation that marks the first step in an attempt to phase out stamp duty altogether. The upper house has now passed the First Home Buyer Choice legislation.
The initiative’s aim is to reduce the amount of money required upfront for a home purchase and increase the rate of home ownership in NSW. Due to the increasing cost of houses, home ownership has decreased from 70 percent in the 1990s to approximately 64 percent now. Home ownership has been on the decline in recent years, and this is especially true for younger people and those with lower incomes.
Key Points
- The NSW government has passed legislation allowing first home buyers to pay an annual land tax instead of stamp duty
- The initiative is designed to lower the barriers for young people accessing the property market
- The option is restricted to homes valued below $1.5 million and vacant land intended for the construction of a first home valued under $800,000
- Once an owner pays land tax, the future owners retain the option to pay stamp duty
1. What is NSW’s new stamp duty initiative and who is it for?
The initiative’s primary focus is to make it easier for young people to enter the property market by offering an annual fee (equal to $400 plus 0.3% of land value) instead of an upfront lump sum payment of stamp duty, applicable to properties worth less than $1.5 million.
For example, if you buy a $1 million house, you can either pay an upfront fee of $40,090 or an annual fee of around $2200.
The initiative will also apply to vacant land intended for the construction of a first home, with the threshold set at $800,000.
2. How will the new stamp duty initiative help first home buyers in NSW?
The most significant advantage for first home buyers is that they will no longer need to come up with a large sum of money upfront in order to pay stamp duty on their property purchase. This will help make getting onto the property ladder more achievable, as well as freeing up funds that can be put towards a deposit or other associated costs such as legal or Loan Mortgage Insurance (LMI).
3. What are the restrictions on the new stamp duty initiative?
The new legislation is designed to give a choice to homebuyers in the country. The option is restricted to homes valued below $1.5 million and vacant land intended for the construction of a first home valued under $800,000. The legislation also provides an option for future owners to pay stamp duty even if the original owner pays land tax.
It is projected that the new legislation could lead to an increase in demand for property in NSW, as well as a potential increase in prices, meaning that first home buyers who are not able to take advantage of the initiative may find it more difficult to enter the market.
If you’re a first home buyer in NSW and you’re looking to take advantage of the new stamp duty initiative, be sure to speak to a specialist such as Enigma Home Group about your options and whether you qualify.
4. How can you take advantage of the new stamp duty initiative?
This new program could save you up to two years of the time needed to save for stamp duty. Now, you can try and save money on the biggest purchase of your life with this new legislation that is expected to result in many buyers being able to afford their dream home. This initiative will help reduce the barriers that are currently in place for young people trying to access the property market.
If you’re a first home buyer in NSW, the new stamp duty initiative provides you with an opportunity to enter the property market sooner than you may have thought possible. With the ability to pay an annual fee instead of an upfront lump sum, the initiative is designed to help make owning your first home more achievable. If you’re thinking of taking advantage of the new legislation, be sure to speak to Enigma Home Group about your available options. We can help you take care of all the costs associated with your entire deposit.
To find out more, go to enigmahomegroup.com.au/quiz.
First Home Buyer Choice eligibility and full details can be viewed on the NSW Government Website here
