First Home Buyer Property Tax
Are you a first home buyer in NSW?
Have you exchanged your contract on/after November 11th 2022?
If you’ve received a stamp duty discount via the First Home Buyers Assistance Scheme, you now have another choice when it comes to paying the remaining stamp duty.
Property Tax
This newly implemented tax allows an eligible first home buyer to opt into paying an annual property tax, as opposed to an upfront transfer duty.
This can be particularly cost-effective if you have chosen to only live in the property for a limited time period (e.g 5-10 years), as the annual tax MAY be cumulatively lower than the upfront stamp duty you’d be required to pay.
The calculation is also based on the land value (not the contract price).
Example 1
We have chosen a property in Raymond Terrace, whose land value is currently $258,000 (purchased for $690,000).
By using the calculator provided, we can see the buyers are better off paying the upfront stamp duty property tax if they planned on living there for 10 years.
If they have a definitive plan to renovate & sell after 5 years, the calculator would demonstrate paying the property is a better option for their situation.
Example 2
We have chosen a property in Singleton Heights, whose land value is currently $225,000 (purchased for $655,000).
In this instance, the buyers are better off paying the upfront stamp duty, as it’s essentially the same as the first years annual property tax.
Example 3
We have chosen a property in Merewether, whose land value is currently $969,000 (purchased for $1,295,000).
In this instance, the buyers may better off paying the upfront stamp duty, if they plan on living there longer than 20 years.
The annual tax rate is indexed and is ongoing, so as a buyer you’ll need to have a pretty good idea what your plans are for the property. Once you make the choice, you can’t revert to the other option.
As you can see, the calculations are property specific & your conveyancer will run you through the options when it’s time to discuss your stamp duty obligations.
For additional details, refer to the Revenue NSW site.
If you have any questions about your situation, contact me via leah@stevensconveyancing.com.au or call 0414 894 031 to discuss.
Please note that the information contained in this article is of a general nature only and does not constitute legal advice. Stevens Conveyancing does not take responsibility for any errors or omissions obtained from the use of this information.