Buying your first home? NSW has a new stamp duty option
NSW First home buyers can now choose to pay up-front stamp duty or a smaller annual land tax of $400 plus 0.3 %of the property’s land value.
To be eligible the purchase price of the property must be between $650k and $1.5m.
Note that First home buyers are exempt from paying transfer (stamp) duty for purchases below $650k.
Check out The First Home Buyer Choice calculator to help eligible NSW first home buyers make an informed choice.
The calculator allows you to see which option is best for you and your cash flow. We looked at a $700,000 example property in Smithfield, Sydney. The upfront stamp duty was $10,363, or you could elect to pay the $1,993 p.a. property tax, forever, and be subject to indexation for any increases in the land value over time. The breakeven point (assuming no increases to the value of the land) is 5 years 1 month. Translated, it means when you add up the yearly payments, they are more than the upfront duty payment of $10,363 after 5 years.
NSW Treasury data shows if someone purchased a $1 million house and sold it 10 years later, the annual land tax payments over the 10 years would total $19,881 (in present value terms) compared to $40,090 in up-front stamp duty — a saving of $20,209.
This initiative is in addition to the existing First Home Owner (New Homes) Grant, and the First Home Buyers Assistance Scheme offering transfer duty exemptions and concessions.
If you want to proceed, make sure you go to the NSW Government website to ensure you have all the forms and documents to show that you are eligible.
There is a transitional period where eligible first home buyers will have to pay transfer (stamp) duty but can then apply for a refund of the duty after 16 January 2023 on the Revenue NSW website. The calculator is for informational purposes only and does not replace financial or legal advice.
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