First Home Buyer choice - one-off or annually?Dec 04, 2022
On 11 November 2022, the NSW State government passed the Property Tax (First Home Buyer Choice) Act 2022 (“the Act”) which provides first home buyers with alternatives when paying stamp duty.
The Act provides first home buyers with the choice of either:
1. paying stamp duty at the time of purchasing the property; or
2. opting-in to pay an annual property tax for properties with a purchase price of up to $1.5 million.
The idea behind the scheme is to reduce the upfront costs for first home buyers thereby making it more affordable for them to get into the property market.
The First Home Buyer Choice scheme comes into effect on 16 January 2023. First home buyers exchanging contracts after this date will have the right to opt-in to the new scheme.
If contracts were exchanged between 11 November 2022 and 16 January 2023 - first home buyers may apply retrospectively to opt-in to the annual property tax. They will still be required to pay stamp duty as normal at the time of their purchase but can apply to opt-in to the new scheme after 16 January 2023 and if approved can then apply for a refund of the stamp duty that was previously paid. Any such retrospective applications must be made before 30 June 2023.
To calculate what the annual property tax would be on a purchase there are calculators available on NSW Government’s website.
To be eligible for the Property Tax the purchaser must satisfy the requirements of a first home buyer, meaning:
- you must be an individual (not a company or trust)
- you must be over 18 years old
- you, or at least one person you’re buying with, must be an Australian citizen or permanent resident
- you or your spouse must not have previously:
- owned or co-owned residential property in Australia
- received a First Home Buyer Grant or duty concessions.
- the property you are buying must be worth less than or equal to $1.5 million
- you must sign the contract of purchase on or after 11 November 2022 (see below for details).
- Eligible properties include a house, townhouse, strata unit, company title unit, flat, duplex or a vacant block of residential land intended as the site of a first home.
- A property is not eligible if it includes a business or business premises or is the site of a holiday home.
- The value of the property (dwelling) you're buying must not exceed $1.5 million. If you're buying vacant land, it must not exceed the value of $800,000.
- You must move into the property within 12 months of purchase and live in it continuously for at least 6 months.
If there is more than one purchaser, you can still apply to opt-in to the property tax, provided:
- All purchasers must satisfy the eligibility criteria; and
- All purchasers must agree to opt-in to the property tax.
Following approval, the property becomes eligible for property tax and the transfer is exempt from stamp duty.
Sale of a property subject to property tax
If a property that is subject to the annual property tax is sold, the annual tax will not carry over to the new purchaser unless they are an eligible first home buyer and they opt-in to the scheme. Otherwise stamp duty is payable as normal.
More information about the new scheme is available on the NSW Government website.
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