Introduction
The First Home Buyer Choice now offers first home buyers the option of paying annual property tax to purchase their properties, rather than paying stamp duty (transfer duty) up front. This reform in NSW is designed to help first home buyers reduce the cost of entering the property market by removing stamp duty and it officially commenced on 16 January 2023.
Difference Between Stamp Duty and Property Tax
Stamp Duty
Stamp duty is an upfront payment that is made when a property is purchased. It is calculated as a percentage of the purchase price of the property or the current market value (whichever is higher). The stamp duty rate varies depending on the value of the property.
Property Tax
Property tax is paid based on the value of the land on which the property is purchased. The property tax is calculated as follows:
-As an owner-occupied property, the annual cost is $400 plus 0.3% of the land value;
-As an investment property, the annual cost is $1,500 plus 1.1% of the land value.
https://fhbcalculator.service.nsw.gov.au/
Land value still applies even if you are buying strta title properties. Use the First Home Buyer Choice Calculator to do a detailed calculation.
Eligibility
-You must be an individual (not a company or trust) over 18 years of age;
-You, or at least one person buying with you, must be an Australian citizen or permanent resident;
-You or your spouse must not have previously owned a residential property in Australia and must not have received a first time buyer grant;
-You must sign the purchase contract on or after 11 November 2022.
Property Requirements
-The value of the property you are purchasing may not exceed $1,500,000. If you are purchasing a vacant land, it must not exceed the value of $800,000.
-You must move into the property within 12 months of purchase and live in it continuously for at least 6 months.
-Property is not eligible if it is for business or commercial purpose, or is the location of a holiday home.
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