First home buyers will be able to avoid paying up front stamp duty and instead pay a small annual property tax under reforms confirmed in today’s State Budget.
Premier Dominic Perrottet said the plan would enable more people to buy their first home.
“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” Mr Perrottet said.
“In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent. Lifting home ownership is part of this Government’s efforts and ambition to help families who are feeling the squeeze.
“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers.”
Treasurer Matt Kean said the NSW Government had allocated $728.6 million over the next four years to help first home buyers get a foot on the property ladder.
“We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them,” Mr Kean said.
“It will mean more NSW residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership.”
For a NSW household with the median income that saves 15 per cent of their income, stamp duty adds about two years to the time required to save the up-front costs of the median NSW dwelling.
The property tax option will be available for properties for up to $1.5 million, helping a broader group to become first home buyers. Together with existing first home buyer initiatives, the Government will offer support to about 97 per cent of all first home buyers, or about 55,000 people per year.
Under the new initiative, first home buyers who opt into the property tax will pay an annual property tax of $400 plus 0.3 per cent of the land value of the property.
Minister for Planning and Minister for Homes Anthony Roberts said the property tax option for first home buyers will help increase home ownership across NSW.
“The NSW Government is also looking at initiatives to help boost housing supply by cutting planning assessment timeframes, co-funding enabling infrastructure and investing in new and improved social housing,” Mr Roberts said.
“This Government will use every lever at its disposal – including tax, planning, supply, or working with the Commonwealth — to give more people in NSW the opportunity to own their own home.”
Legislation to establish the property tax will be introduced during the second half of 2022 with eligible first home buyers able to apply to opt into the property tax from January 16 2023. For contracts exchanged in the period between enactment of the legislation and January 15 2023, eligible first home buyers will be able to opt-in from January 16 2023 and receive a refund of stamp duty already paid.
From January 16 2023, eligible first home buyers who opt into the First Home Buyer Choice will not pay stamp duty on their purchase. The property will not be locked into the scheme if it is sold.
First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000.