The NSW State Budget for 2022 was announced on 21 June and included plenty to unpack for those of us in the real estate industry. We’ve done our best to break it all down for you.
First Home Buyers – Land Tax or Stamp Duty?
One of the most significant changes is ‘The First Home Buyer Choice’, which aims to remove the immediate burden of stamp duty costs for first home buyers and replace it with an annual fee or tax. Under the scheme, first home buyers paying less than $1.5million, could opt to pay $400 plus 0.3% of the land value of their new home annually rather than stump up the lump sum stamp duty costs. It is planned for the new tax to be implemented by 16 January 2023.
If the home becomes an investment property, the land tax becomes $1500 plus 1.1% land value per annum, but first home buyers must live in the home for six months continuously to be eligible for the tax.
Existing stamp duty exemptions and concessions for homes less than $800,000 will still apply.
The hope is that it will enable first home buyers to enter the market earlier than planned by reducing the deposit amount required to purchase.
Shared Equity Scheme
Strict eligibility criteria apply to the NSW shared equity scheme which allows for the government to own up to a 40% share in a new home or 30% in an existing dwelling. Purchasers are not required to make repayments to the government and no interest is applied while the participant remains eligible for the scheme.
Eligibility criteria:
- A single parent of a child under 18 years
- A single person aged 50 or over
- First home buyers who work as nurses, police and teachers
- Earn $90,000 or less if you are single
- Earn $120,000 or less if you are a couple
- Property price must be less than $950,000 in metro or major regional hubs (Lake Macquarie, Newcastle, Central Coast, Northern NSW, Wollongong)
- Property price must be less than $600,000 in all other regional areas
- Must have a 2% deposit of the purchase price
- Must be the principal residence
- Buyer must not own any other land in Australia or overseas
- Mortgage insurance must not apply.
Obligations to watch out for:
- There will be an annual review of your continuing eligibility
- You must maintain the property
- You are responsible for all associated property costs such as council rates and mortgage payments
- If you become no longer eligible you will be required to start paying back the government for their equity share.
Housing Supply Supercharged
The NSW government is keen to address housing supply issues within the state and are planning on injecting $500 million into infrastructure, land release developments and planning. There’s $300 million for councils to support critical infrastructure investments such as water, roads, sewers and parks. There is also significant funding set aside to fast-track planning permissions and rezoning of housing precincts with the aim of enabling hundreds and thousands of new homes to be built across the whole state.
Property Investors & Foreign Owners – Changes to Land Tax
Property investors who own more than two properties and pay their land tax early, previously enjoyed a discount of 1.5%. This has now been reduced to just 0.5%. And for foreign property owners, their 2% surcharge on land tax is being increased to 4%.
If all these changes have you feeling confused and you’re wondering about your property investment decisions over the next few months, talk to one of our expert sales consultants. It’s our job to stay abreast of all these changes that affect our industry and we’re happy to talk you through them and help you determine your next property move.