With a new government in NSW comes more changes to property taxation that stand to benefit first home buyers. The Minns government went to the election promising to remove the controversial land tax system introduced by the Perrottet government, and come 1st July this year, they intend to make good on that promise, introducing the legislation for changes to stamp duty to parliament at the end of May.
The planned changes to stamp duty thresholds and access to more first home buyers’ concessions will see five out of six first home buyers paying a reduced or zero stamp duty. First home buyers who qualify will be exempt from stamp duty for properties worth up to $800,000. Previously the property value was set at $650,000. The increase more accurately reflects the current property market pricing.
Additionally, concessions will apply to properties worth up to $1million, up from the previous $800,000. According to the government, this means that 84% of all first home buyers will pay no stamp duty at all or a reduced rate.
“I understand the stress of trying to purchase your first home. I want more singles, couples and families realising this dream,” premier Chris Minns said.
“This is a fairer and simpler system to ensure more first home buyers have a chance of owning their first property.”
Labor opposed the scheme introduced by the Perrottet government that introduced a land tax that could be paid annually rather than up front. The property land tax rates for the 2022-2023 & 2023-2024 financial years are $400 plus 0.3% of land value for owner occupied properties (where the property is the owner’s main residence) or $1,500 plus 1.1% of land value for investment properties. Anyone who has opted into this scheme or does so before June 30 will be allowed to continue the option, but it will be closed off to any new purchases after that date.
Labor has described the land tax as a “forever tax on your home” and believes that their solution is more equitable. To ensure this is the case they have also introduced an eligibility requirement that purchasers must live in the home for a minimum of one year. Previously this requirement was set at just six months.
According to the NSW government, a first home buyer purchasing an $800,000 property will save up to $31,090 under the changes and pay no stamp duty at all. Properties valued over $800,000 will still be required to pay stamp duty but with concessions on a sliding scale. Properties up to $900,000, for example, will save $15,545, if the price increases to $950,000, savings drop to $7,773 and for properties at $990,000 the savings drop to just $1,555. See link to NSW Govt FH Buyer Information
With the increased property values eligible for the scheme more accurately reflecting the market, it means that first home buyers may not have to move too far out of city centres to be able to afford to buy. It may also mean that deposit savings will be higher without the need to save for stamp duty, potentially increasing borrowing capacity and in some cases it may negate the need for lenders mortgage insurance.
If you’re a first home buyer looking to purchase, we have several properties currently listed that will fit the criteria of this scheme. Talk to one of our expert sales agents today.