The Property Tax (First Home Buyer Choice) Bill 2022 was approved on Friday, 11 November 2022 – Act No 60. This Act enables first-home buyers to be given a choice to either pay an annual property tax or the upfront cost of stamp duty.
The Property Tax Bill 2022 only Applies to First-home Buyers That Must Meet The Following Eligibility Requirements:
- you must be an individual (not a company or trust)
- you must be over 18 years old
- you, or at least one person you’re buying with, must be an Australian citizen or permanent resident
- you or your spouse must not have previously:
- owned or co-owned residential property in Australia
- received a First Home Buyer Grant or duty concessions.
- the property you are buying must be worth less than or equal to $1.5 million
- you must move into the property within 12 months of purchase and live in it continuously for at least 6 months
- you must sign the contract of purchase on or after 11 November 2022 (see below for details).
The Property Tax Bill 2022 aims to lower the upfront costs of owning a home for First Home Buyers and practical moves to increase home ownership in New South Wales.
Addressing The Declining Home Ownership Rates
The new taxation policy addresses the prevailing issue of declining home ownership throughout the New South Wales region. This problem has been ongoing since the 1990s with increasing real estate prices and the added tax burdens.
Only 64% of the New South Wales population owns their own home. The steady decline is evident among young families and the younger generation within the lower income bracket.
The new legislation is said to make it easy for first-home buyers to acquire a property. It removes the obligation of paying the stamp duty upfront, which will lower the upfront costs and cut at least two years of their time in saving for their home.
Current concessions for stamp duty are accessible to first-home buyers with a cap limit of $800,000. With the expansion of the property tax system, the new tax option will become available to those seeking broader coverage, or 97% of first-time home buyers, or roughly 57,000 people every year. The property tax option will be available for properties for up to $1.5 million.
Empowering Young Families and First Home Buyers
New South Wales’s move to allow first home buyers to opt by paying the upfront stamp duty or paying an annual property tax. The options are as follows:
- (a) paying the usual amount of stamp duty based on the dutiable value of your property; or
- (b) paying an annual property tax based on the land value of the property.
It will not only ease the financial burden for young families but also empower the younger generation to put their money into property. This change will significantly impact Australia’s economic growth and boost the dwindling real estate market.
Housing demands are expected to build economic security, foster financial independence, and allow younger families greater freedom. In addition, this reform offers New South Wates residents better means of purchasing their first homes without experiencing higher penalties or having the property foreclosed.
Choosing Between Property Tax or Stamp Duty
The legislation has already passed the NSW Parliament and is a step closer to becoming accessible to New South Wales residents. It is expected to officially start in January 2023, with grantees purchasing their property from 12 November onwards.
Anyone approved within the allotted transition period can get their money returned on their stamp duty if they opt for the yearly tax instead. Under this new program, individuals and families seeking to buy their homes for the first time can choose to pay an annual tax of $400 plus the 0.3% land value.
For example, a first-time home buyer purchasing an $830,000 home in Sydney with a $265,000 land value can either pay the upfront cost of $32,440 stamp duty or opt for the yearly $1,195 yearly property tax.
The same goes for an individual purchasing a Sydney house amounting to $1,350,000 with $810,000 land value. They can opt to pay the $59,129 lump sum or spread their payments into annual repayments of $2,830.
Choosing between the stamp duty payment or yearly property tax is a matter of personal fit and financial capacity. First-time home buyers generally keep their houses longer than 10 years, which gives them enough time to repay the government of their tax dues.
How Does The First Home Buyer Choice scheme work?
The legislation has already passed the NSW Parliament and is a step closer to becoming accessible to New South Wales residents. It is expected to officially start in January 2023, with grantees purchasing their property from 12 November onwards.
Anyone approved within the allotted transition period can get their money returned on their stamp duty if they opt for the yearly tax instead. Under this new program, individuals and families seeking to buy their homes for the first time can choose to pay an annual tax of $400 plus the 0.3% land value.
For example, a first-home buyer purchasing an $830,000 home in Sydney with $265,000 land value can either pay the upfront cost of $32,440 stamp duty or opt for the yearly $1,195 yearly property tax.
The same goes for an individual purchasing a Sydney house amounting to $1,350,000 with $810,000 land value. They can opt to pay the $59,129 lump sum or spread their payments into annual repayments of $2,830.
Choosing between the stamp duty payment or yearly property tax is a matter of personal fit and financial capacity. First-home buyers generally keep their houses longer than 10 years, which gives them enough time to repay the government.
How Much the NSW Government is Putting Into The Housing Scheme
According to the Treasury Office of New South Wales, the government is allocating $728.6 million stretched over the next four years to entice young families and individuals to buy their first homes. The First Home Buyer Choice scheme reduces the upfront costs needed for purchase and the time required to save on the initial deposit.
If you are a first-home buyer and looking for a property law firm that can act on your behalf of you during the buying process then Platinum Lawyers can help.
Call us at (02) 8084 2764 or enquire online
