NSW Labor promises to axe stamp duty for many first home buyers

The two major political parties in NSW rarely agree on anything. But it’s safe to say both the Coalition and Labor recognise that paying upfront stamp duty acts as a major barrier to getting on the property ladder.

So with the March 25 state election just weeks away, the two parties are competing with each other on how best to overhaul the tax.

First out of the blocks was the Coalition, which, as the current government, passed the First Home Buyer Choice legislation in November, giving first home buyers the option of paying a smaller annual tax rather than upfront stamp duty when they buy a home valued up to $1.5 million.

The annual tax payments are based on the property's land value and set at the following rate for 2022-23 and 2023-24:

• $400 plus 0.3% of land value for owner-occupied properties

• $1,500 plus 1.1% of land value for investment properties 

Opting for the annual tax should cut up to two years off the time it takes to save a deposit and see the majority of eligible first home buyers pay less tax overall, according to Premier Dominic Perrottet.

While the First Home Buyer Choice only officially began on 16 January 2023, the legislation could prove short-lived with the opposition vowing to repeal it if it wins government in March.

Labor’s plans for stamp duty reform  

In its place, Labor would abolish stamp duty for first home buyers purchasing properties worth up to $800,000. They would also offer a discounted rate for properties priced under $1 million.

Under the First Home Buyers Assistance scheme, those thresholds are currently set at $650,000 for full stamp duty exemption and $800,000 for the discounted rate.

Labor said the changes would see 95% of all first home buyers in NSW pay no tax or a reduced rate on their home.

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