Stamp duty is often considered to be a major upfront barrier to those looking to enter the property market but, even with this new scheme, there are limits to what first home buyers can do.
From today, 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 worth up to $1.5 million.
Also read: Stamp duty could be axed: ‘Worst tax ever’
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.
Which option is better?
Obviously this would depend on each individual's circumstances but Domain ran the numbers and found paying a large sum upfront may be the cheaper option if you planned on owning the property for a long time.
Domain analysis found those taking up the scheme and purchasing a home up to $1.5 million would need to live in the property between 13 and 18 years before reaching stamp duty costs.
It’s also worth noting that different rates will apply depending on whether you plan to live in the home or plan to own it as an investment property.
What if I already bought my first home but want to access the scheme?
Anyone who purchased their first property between November 12 last year and today can still apply for the scheme.
Home buyers who purchased between then and now will have already paid stamp duty, but can now apply for a refund if they choose to opt into the land tax fee instead.
So, someone who purchased their first home after November 12, 2022 for $1 million would have had to pay more than $40,000 in stamp duty. They could now have that money returned to them and instead pay just $2,200 in property tax for the first year and $19,881 over 10 years (in present value terms).