First Home Buyer Choice package in NSW Budget to provide new buyers with stamp duty assistance

First-time buyers will have the option of choosing between an upfront payment or a reduced annual property tax as part of reforms to make home ownership more affordable in NSW.

The First Home Buyer’s Choice is part of a multi-billion dollar housing project to be unveiled in the 2022-23 NSW Budget.

Under the new initiative, first-time buyers who opt for property tax will pay an annual property tax of $400 plus 0.3% of the property’s assessed value.

NSW Premier Dominic Perrottet said in a statement announcing the measures that the state government wanted to remove some of the barriers for new home buyers.

“We want to lower the barriers to home ownership for first-time buyers looking for a home of their own,” Perrottet said.

PERROTET PRESSES

New South Wales Premier Dominic Perrottet. Image: NCA NewsWire


The Prime Minister noted that the share of first-time buyers under 35 had fallen from 67% to 61% over the past two decades.

“Homebuyer’s First Choice will remove one of the biggest upfront costs of buying a home,” he said.

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Treasurer Matt Kean said the NSW government has allocated $728.6 million over the next four years to help first-time home buyers.

For an NSW household whose median income saves 15% of their income, the stamp duty adds around two years to the time it takes to save upfront median NSW housing costs.

The property tax option will be available for properties priced no more than $1.5 million.

The government estimated that First Home Buyer Choice support, combined with existing initiatives for first home buyers, would help around 55,000 people a year.

Legislation establishing the property tax will be introduced in the second half of 2022, with first eligible buyers able to apply to participate in the property tax from January 16, 2023.

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The program would apply to first-time buyers with a budget of less than $1.5 million.


For contracts traded between the enactment of the legislation and January 15, 2023, eligible first buyers will be able to register from January 16, 2023 and receive a refund of stamp duty already paid.

From January 16, 2023, eligible first-time buyers who opt into First Home Buyer’s Choice will not pay stamp duty on their purchase. The property will not be locked into the scheme if it is sold.

First-time home buyers will still be able to claim a full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000.

Real Estate Institute of NSW chief executive Tim McKibbin said the proposed reform will give buyers an additional factor to consider and another calculation to make.

Mr. McKibbin had long argued that the existing stamp duty system was ineffective.

“Whenever a tax is consideration for a transaction, and not merely a consequence of it, we believe it falls under the label of a ‘bad tax,’” he said. .

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