Crunch Finance Article

Pay No Stamp Duty on a house up to $800,000

As of the 1st of July 2023, the Fresh Start plan, proposed by the Labor government, replaces the outgoing First Home Buyer Choice introduced…

NSW Government Introduces a new first home buyer, stamp duty scheme.

As of the 1st of July 2023, the Fresh Start plan, proposed by the Labor government, replaces the outgoing First Home Buyer Choice introduced by the previous Liberal government. The Fresh Start plan features lower house price caps and offers full exemptions from stamp duty for first-home buyers (FHBs) purchasing homes valued at $800,000 or less.

If you’re a first-time homebuyer in NSW, it’s important to understand your options and determine the best course of action. To help you make an informed decision, Crunch Finance has analyzed the possibilities and crunched the numbers. Here is our guide for FHBs in NSW as the stamp duty reform takes effect in the state.

In simple terms, this new update means you will pay no stamp duty on a house up to the value of $800,000


The July 01st 2023 Changes to First Home Buyers Assistance

Effective from 1 July, the First Home Buyers Assistance Scheme will see adjustments in the Transfer Duty exemption and concession thresholds. The exemption amount will increase from $650,000 to $800,000, while concessions will be extended from $800,000 up to $1,000,000. As a result, eligible first home buyers purchasing within these thresholds will either be exempt from paying Transfer Duty entirely or will only be required to pay a reduced portion of it.

These modifications are expected to provide valuable support to first home buyers in several ways. With escalating property prices and rising interest rates, the increased exemption amounts align better with the current market conditions. This expanded range of options allows first home buyers to explore properties without being compelled to seek homes in distant locations to meet affordability requirements.

Moreover, these changes enable buyers to allocate more of their savings towards the deposit, rather than reserving funds for the substantial stamp duty amount. This increased borrowing capacity has the potential to save first home buyers from incurring additional expenses such as Lenders Mortgage Insurance, which covers the loan and stamp duty costs on top of the deposit.

To qualify as an eligible first home buyer in New South Wales, you must fulfill the following criteria:

  • Must be an individual (not a company or trust).
  • Must be over 18 years of age.
  • Either the buyer or at least one person involved in the purchase must be an Australian citizen or permanent resident.
  • Neither the buyer nor their spouse should have previously owned or co-owned residential property in Australia, nor received a First Home Buyer Grant or duty concessions.
  • Within 12 months of purchase, the buyer must move into the property and continuously reside in it for a minimum of 6 months.

 

How these changes & savings look

Property price Previous stamp duty New stamp duty Savings
$700,000 $10,363 $0 $10,363
$750,000 $20,727 $0 $20,727
$800,000 $31,090 $0 $31,090
$850,000 $33,340 $10,023 $23,318
$900,000 $35,590 $20,045 $15,545
$950,000 $37,840 $30,068 $7773
$990,000 $39,640 $38,086 $1555

 

Changes to Current Scheme – First Home Buyers Choice (Annual Property Tax)

The Annual Property Tax has been a popular choice among first home buyers, providing a pathway to save enough funds for a deposit without the added burden of Transfer Duty (previously known as Stamp Duty). Currently, first home buyers have the option to “opt in” and pay an annual property tax instead of the standard stamp duty when acquiring established residential properties or residential vacant land.

Under the current scheme, first home buyers can purchase established residential properties up to $1.5 million and residential vacant land up to $800,000. The amount payable for the annual property tax is calculated based on the unimproved land value and varies depending on the property’s purpose:

  • Owner-occupied properties: $400 plus 0.3% of the land value.
  • Investment properties: $1,500 plus 1.1% of the land value.

As of July 01st 2023, this scheme will be scrapped and replaced with the First Home Buyers Assistance Scheme.

The proposed changes to stamp duty policies for first home buyers in New South Wales are indicative of a concerted effort to improve affordability and expand opportunities within the property market. By replacing the Annual Property Tax scheme with an enhanced First Home Buyers Assistance Scheme, the government aims to provide vital support to eligible individuals in their pursuit of homeownership.

 

We can help you take advantage of these savings!

Navigating the NSW stamp duty reform requires careful consideration of various factors. While there is a limited window of opportunity, the potential savings can be substantial. If you’re uncertain about the best approach or ready to begin your home-buying journey, don’t hesitate to reach out to Crunch Finance or book a consultation via the website. Our Finance Experts are here to help you make an informed decision
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