Changes to duty for first home buyers
From 1 July 2023, the NSW Government has introduced 2 major changes to Transfer Duty (previously known as “stamp duty”) that will affect first home buyers.
1. First Home Buyer Choice Scheme Closing
Firstly, the closure of the short-lived First Home Buyer Choice Scheme (FHBCS), which allowed first home buyers to elect to pay an annual property tax on properties up to a maximum value of $1,500,000 for an established residential property and $800,000 for vacant residential land.
The FHBCS was only introduced on 16 January 2023, although it was available to first home buyers who purchased on or after 11 November 2022. Those who have opted in to the scheme will continue to receive their annual tax assessment from Revenue NSW and will be required to continue to make their annual payments until they sell the property.
First home buyers who wish to take advantage of this scheme will need to exchange contracts on or before 30 June 2023 to be able to opt in, before it is abolished on 1 July 2023.
2. First Home Buyer Assistance Scheme Expanding
Secondly, the expansion of the First Home Buyer Assistance Scheme (FHBAS), so that the threshold for exemptions for new and existing home purchases by eligible first home buyers will increase from $650,000 to $800,000, and the concessional rate will increase from $800,000 to $1 million. This means that if you pay up to $800,000 for your first property and are an eligible First Home Buyer you will not be required to pay any Transfer Duty. If you purchase your first property between $800,000 to $1,000,000 you will receive a concession and will only be required to pay a portion of Transfer Duty.
3. Change to residence requirement
In addition to the above, for contracts entered into on or after 1 July 2023, purchasers under the above following schemes must move into their homes within 12 months of settlement and live in the property for a continuous 12-month period to satisfy the residence requirement (this was previously 6 months):
First Home Buyers Assistance Scheme;
First Home Owner grant;
deferral of transfer duty payment for off the plan transactions; and
exemptions for tenants of the Department of Housing and Aboriginal Housing Office.
Please contact Slack-Smith Legal if you have any questions or require any assistance in relation to transfer duty for first home buyers.
