NSW Stamp duty is a tax charged by state and territory governments on property purchases, calculated based on the value of the property and paid at the time of purchase. On 21 June 2022, the New South Wales Government has announced plans to make some stamp duty optional. The June State Government Budget included a new policy referred as First Home Buyer Choice Scheme to offer first home buyers the choice to pay a one-off lump sum tax (‘stamp duty’) or an annual land tax when purchasing homes under a certain value. This annual land tax will be similar to local government rates.
First Home Buyer Choice Scheme
The key features under the new proposed First Home Buyer Choice scheme are:
- The option as announced is only open to eligible First Home Buyers, who enter into a purchase contract on or after 16 January 2023.
- For contracts exchanged between the enactment of the legislation and 15 January 2023, eligible first homebuyers will be eligible for a refund of the duty paid should they wish to opt into the land tax on 16 January 2023.
- There will be a higher rate of annual property tax for investors ($1,500 plus 1.1% of land value) than for owner occupiers ($400 plus 0.3%). These rates will be indexed annually to wage growth.
- The tax will be based on a financial year unlike land tax which is based on a calendar year.
- The property value must not exceed $1,500,000.
- The existing First Home Buyers Assistance Scheme duty concessions for properties valued up to $800,000 will remain. Under the scheme duty is exempt up to $650,000 and the concession phases out up to $800,000. Buyers above $650,000 will have the option to pay the concessional duty or choose to be subject to the annual property tax.
- Guidance from the New South Wales Government suggests that upon sale by those who elected the property tax option, the purchaser would be subject to normal duty unless they too are an eligible First Home Buyer or Buyers.
The New South Wales Government plans to introduce the new land tax policy to the New South Wales Parliament during the second half of 2022. The land tax legislation will first need to pass the Parliament in order for the policy to be implemented. Should you be looking to buy your first home and require advice on any available State or Federal tax concessions or exemptions please contact our Property Team.
For more information contact us or call 028764 1776 for an free appointment.
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