NSW introduces historic stamp duty reforms

First home buyers in NSW now have to make an important decision before buying a property: pay a large, one-off stamp duty fee up front or opt for a smaller, ongoing property tax every year.

That’s after the NSW government’s First Home Buyer Choice legislation passed parliament in November.

The new law was dubbed a “game-changer for first-home buyers” by Premier Dominic Perrotett, as it will significantly reduce the cost of breaking into the market. As a result, it should save around two years off the time needed to save for a deposit.

Here’s everything you need to know about the scheme.

When does it start?

The scheme officially begins on 16 January 2023. But any eligible first home buyers who make a purchase before then can apply for a refund on their stamp duty if they choose to opt into the property tax next year.

How does it work?

The scheme gives eligible first home buyers the choice between paying stamp duty upfront or an annual property tax when they buy a property worth up to $1.5million (or $800,000 for vacant land).

The annual property tax payments will be based on the land value of the purchased property as calculated by the NSW Valuer General on 1 July each year.

The property tax rates for 2022-23 and 2023-24 will be:

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

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

What about existing first home buyer concessions?

Existing first home buyer stamp duty exemptions and concessions, which are available on properties worth up to $800,000, will not change.

So this means if you buy a new or existing home worth up to $650,000, you will still be exempt from stamp duty.

If you buy a property above $650,000 and below $1.5 million, you can use the First Home Buyer Choice Calculator to see which option – paying stamp duty or an ongoing property tax – might best suit your circumstances.

What happens when a property under the scheme is sold?

Only first home buyers are eligible to pay the property tax. So other purchasers will continue to pay stamp duty as normal.

Are you a first home buyer looking to enter the market? Eventus Financial is an award-winning mortgage broker in Sydney with over 340 five-star Google reviews. Schedule a no-obligation consultation with Alex to find out how we can help you too.