Currently first home buyer’s do not pay stamp duty for properties worth more than $800,000, this existing concessions will continue but the government has seen a decline in property ownership amongst the young and low income groups, so they have devised a way to reduce the entry cost to acquire your 1st property by eliminating stamp duty and replacing it with an annual property tax:

  • First home buyers purchasing properties for up to $1.5 million will be able to choose to pay an annual property tax instead of stamp duty.
  • The property tax will only be payable by first home buyers who choose it, and will not apply to subsequent purchasers of a property.

 

The annual property tax payments will be based on the land value of the purchased property, the property tax rates for 2022-23 will be:

  • $400 plus 0.3 per cent of land value for properties whose owners live in them
  • $1,500 plus 1.1 per cent of land value for investment properties.

Consider the following:

  • This measure does lower the entry cost for 1st home buyers.
  • The rate is different for your main residence and an investment property.
  • A lower land value means a lower property tax, so a unit purchase may be favourable.
  • You are ahead with a property tax but this depends on how long you own the property.

This still needs to be approved:

  • This legislation will be introduced into the NSW Parliament during the second half of 2022.
  • Eligible first home buyers who sign a contract of purchase on or after 16 January 2023 will be eligible to opt into the property tax and will not be required to pay stamp duty.
  • Eligible first home buyers who sign a contract of purchase between the passage of the legislation and 15 January 2023 will be eligible to opt into the property tax. But, these purchasers will be required to pay any applicable stamp duty within the usual required periods and from 16 January 2023, will be able to apply for and receive a refund of that duty.

Check out the examples on the NSW Government website https://www.nsw.gov.au/initiative/first-home-buyer-choice

Please call if you would like to discuss this further.

Regards,
VJC Accounting

General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article, then you should seek advice from a qualified professional. VJC accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement with VJC for this purpose.