First Home Buyer Choice may be the shortest-running property scheme laid out by a state government, but there’s still time to take advantage of the initiative.
Announced in November 2022 and introduced on January 16, the program (which gives eligible first-time buyers the choice between paying stamp duty upfront or an annual property tax on new or existing homes) had just gotten off the ground when the new Labor Government came into power in March and decided to abolish it.
The clock is now ticking for first-home buyers who would like the option of paying an ongoing tax rather than being lumped with an upfront stamp duty fee of as much as $66,000. To get an idea of how much annual property tax you would pay if you opt in before July 1, visit the NSW Government’s First Home Buyer Choice calculator.
Under the former government’s policy, first-home buyers have been able to choose an annual property tax on homes (but not investment properties) valued up to $1.5 million. If they were to pay upfront stamp duty on that amount it would add up to a hefty $66,000 sum.
However, Chris Minns’ NSW Labor is scrapping the stamp duty reform. From July 1 there will be a new stamp duty exemption for first-home buyers purchasing properties under $800,000, with concessions for homes up to $1 million.
Here’s what’s about to change in stamp duty for each price bracket;
Purchasing up to $800,000
First-home buyers who purchase a property below $800,000 will have no stamp duty payable on new and existing homes for the rest of this financial year. Currently, and before July 1, only homes worth up to $650,000 qualify for a total stamp duty exemption, while homes worth up to $800,000 qualify for a concession. Buying in this bracket right now would also mean you can opt into the annual property tax and ditch stamp duty all together.
Purchasing up to $1 million
First-home buyers looking to purchase under this price bracket will be eligible for a discount on stamp duty. The amount of concession is yet to be announced but property experts are suggesting the discount could be as much as 50%. For the moment, under the existing framework, first-home buyers at this purchase price can still opt into the yearly tax.
Purchasing between $1 million to $1.5 million
First-home buyers who purchase between these figures won’t be eligible for any stamp duty concessions under Labor’s changes. When the new government abolishes First Home Buyer Choice on July 1, first-home buyers will have no other option than to pay the full stamp duty.
There is a small window of opportunity to complete a purchase, therefore anyone hoping to make the most of the scheme should act quickly.
There is still time
For first-home buyers who want to pay the yearly tax, there is still time to jump on board the soon-to-be-defunct scheme. Labor has confirmed it will honour the Liberal’s program so participants can continue to pay the smaller annual fee while they own their home.
Although an additional ongoing fee might be the last thing many first-home buyers want in the face of rising inflation, the property tax has been a blessing for many. It’s been a way to avoid dipping into savings that could otherwise be used for a deposit – often the greatest hurdle to homeownership. The tax is also less prohibitive for homeowners who only plan on owning the home for a short period.
First-home buyers are still able to apply for the First Home Owner’s Grant (New Homes) which equates to $10,000 for those buying or building a new home. There is also more assistance on offer with the Shared Equity Home Buyer Helper, an initiative getting eligible home buyers onto the property ladder with as little as a 2% deposit. More information can be found on the First home buyer grants and assistance home page of the NSW Government’s website.
To discuss how you might be able to avoid paying an upfront lump sum of stamp duty before the property tax is removed on July 1, talk to a Landen representative today.