New tax year, new policies!!
Payment of a deposit (typically 10%) and stamp duty are two major outlays a purchaser must budget for when buying a new home and, with soaring property prices, this is becoming harder and harder. First home buyers are finding it particularly tough when trying to break into the market.
Small relief may be on the cards for some, with more places becoming available, from 1 July 2022, under the home guarantee schemes. There are now a total of 50,000 opportunities for first home buyers, single parents and people wishing to live in regional Australia to get into the market with only a 2-5% deposit.
In addition to the home guarantee schemes, NSW Premier Dominic Perrottet has announced a new initiative to help first home buyers looking at purchase prices of up to $1.5 million. From 16 January 2023, those buyers can elect not pay the stamp duty at the time of purchase, instead paying an annual property tax of $400.00 plus 0.3% of the current land value of the property. Depending on the eligible stamp duty savings and how long you intend to stay at the property, this may be a more affordable option. The First Home Benefits Scheme will continue to grant exemptions of stamp duty for purchases up to $650,000.00 and concessions for purchases between $650,000 and $800,000.
A few things should be considered when deciding whether to opt in on this new initiative, including the length of time you intend to live at the property and the fact the property tax is calculated on the ‘current’ land value – as your land value increases, so does the annual property tax.
See the following link for some examples of how the new initiative could work:
Under the new scheme, the property tax doesn’t end until the property is sold. This means that if you decided to buy your ‘forever home’, you may end up paying more than the initial stamp duty amount. The first home buyer eligibility requirements will still apply to this scheme so you must ensure you satisfy those requirements, including residency and citizenship.
For more information on the First Home Buyers Assistance Scheme or other benefits available to first home buyers, see the below links to Revenue NSW website:
Given the share of first home buyers under the age of 35 years has declined from 67% to 61% over the last 20 years, this is a positive step towards helping first home buyers.
If you would like to know more about the new government initiative or have any property related questions, our Property Team at Osborn Law are here to help.