In NSW stamp duty is changing for first home buyers and it’s a little confusing! Here’s an easy summary:
o Properties upto $650,000 there are no changes. First home buyers are still exempt from stamp duty
o Between $650,000 – $800,000 you now have a choice of paying the reduced stamp duty for first home buyers or opt in to pay an annual property tax.
o $800,000 – $1,500,000 you can choose to pay stamp duty at normal rates or annual property tax
o Properties over $1,500,000 don’t get any concessions
Property tax will be paid annually and is based on the land value of the purchased property. The property tax rates for 2022-23 and 2023-24 will be $400 plus 0.3 per cent of land value for properties whose owners live in them.
There is an easy calculator that can be found on Service NSW.
The new process has just been introduced so note that :
o For purchases made between 11 November 2022 and 15 January 2023, you’ll need to pay stamp duty but you’ll be able to apply for a refund of the stamp duty if you choose to opt in to property tax.
o From 16 January 2023 you can opt in to the annual property tax directly and won’t need to pay stamp duty.
Examples:
Aisha
• Aisha is buying her first home, a $750,000 apartment in Concord. The apartment has a land value of $270,000.
• As an eligible first home buyer, Aisha qualifies for a concessional rate of stamp duty which in this case results in stamp duty of $20,727.
• In 2022-23, the annual property tax on the apartment would be $1,210.
• Aisha is hoping to upgrade to a larger home in about five years, and thinks she will end up paying less tax under the property tax option.
• She chooses the property tax.
Ranit
• Ranit is buying his first home, a $1.2 million townhouse in Newcastle. The land value of this property is $720,000.
• Stamp duty on this purchase is $50,200, and the purchase price is above the threshold for any first home buyer stamp duty concessions.
• In 2022-23, property tax on the property would be $2,560.
• Ranit is not sure how long he will own the property, but he has heard that half of all owner-occupiers sell their property within about ten years.
• Not having to pay stamp duty would really help to lower the up-front costs of the purchase, so Ranit chooses the property tax.
Contact me for further information or to discuss your situation.
Source: www.nsw.gov.au
