From 1 July 2023, new changes are coming into effect with regards to the First Home Buyers Assistance Scheme.
The annual property tax option (known as the First Home Buyer Choice) which was introduced by the Liberal government is being abandoned by the new Labor government.
The annual property tax policy has been available to first home buyers since 11 November 2022 and officially came into effect on 16 January 2023. This policy will remain available until 30 June 2023 only.
Instead of paying the transfer duty (previously known as stamp duty) upfront, the annual property tax policy allows first home buyers to opt-in to pay an annual property tax on their first property to the value of up to $1,500,000. The annual property tax is based on the value of the property (determined annually by the valuer general) and is calculated as follows:
- For owner occupied properties, it is $400 plus 0.3% of land value; and
- For investment properties, it is $1,500 plus 1.1% of land value.
Eligible first home buyers who exchange contracts on or before 30 June 2023 will have until settlement to opt into the annual property tax. If you are a first home buyer and wish to take advantage of this scheme, you will need to exchange your contract on or before 30 June 2023.
For contracts exchanged on or after 1 July 2023, first home buyers will not have the option to choose between annual property tax or upfront payment of transfer duty.
Instead, from 1 July 2023, eligible first home buyers will be exempt from paying transfer duty for purchases of new and existing homes valuing up to $800,000.00 and a concessional rate of duty will apply to properties ranging between $800,001 and $1,000,000.00.
First home buyers purchasing a house priced over $1,000,000.00 or more will no longer be eligible for any transfer duty exemptions or concessions from 1 July 2023
The residence requirements for first home buyers are also changing from 1 July 2023. The current residence requirement requires first home buyers to move into the property within the first 12 months of purchase and to occupy the property for a continuous period of six months only. From 1 July 2023, first home buyers must move into their homes within 12 months of the date of settlement, and must occupy the property for a continuous period of 12 months.
First home buyers who have opted in to use the property tax option will not be affected by the new changes, and will continue to receive their annual tax assessment from Revenue NSW and will have to make their annual payments until they sell the property.
Retrospective refund applications will remain open until 30 June 2023.
Contact us
The above is a brief and general guide only regarding the changes to the First Home Buyers Assistance Scheme. If you would like to discuss the changes further, please do not hesitate to contact our conveyancing