First home buyers will have the option to pay an annual tax instead of stamp duty under a new plan by the NSW government.
NSW Premier Dominic Perrottet said the First Home Buyer Choice scheme was introduced to make homeownership a reality for more NSW residents.
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“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” 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.”
How will the new scheme work?
Under the new initiative, first home buyers who opt into the property tax will pay an annual fee of $400 plus 0.3 per cent of the land value of the property.
The property tax option will be available for properties up to $1.5 million.
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.
The scheme, together with existing incentives, will support around 97 per cent of all first home buyers, or about 55,000 people per year.
“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,” Perrottet said.
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,” 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.”
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 in to the First Home Buyer Choice scheme will not pay stamp duty on their purchase.
The property will not be locked into the scheme if it is sold.