What you need to know stamp duty and annual property tax

New South Wales (NSW) has recently introduced a new scheme that offers eligible first-home buyers the choice between paying stamp duty upfront or opting for an annual property tax when purchasing a property up to a value of $1.5 million. This initiative is aimed at making it easier for people to enter the property market and could potentially save buyers thousands of dollars.

Under the scheme, first home buyers who choose to pay stamp duty upfront will have to do so between 11 November 2022 and 15 January 2023. However, they will be able to apply for a refund of the stamp duty if they opt for the annual property tax.

From 16 January 2023, eligible first-home buyers will be able to opt-in directly for the annual property tax and won’t need to pay stamp duty at all.

NSW home buyers now have a choice

This new scheme is expected to benefit first-home buyers who are currently struggling to enter the property market due to the high cost of stamp duty. Stamp duty is a tax that is levied on property purchases and is often the difference between being able to afford a new home or holding off on the dream of home ownership.

The NSW government hopes that the new scheme will encourage more first-home buyers to enter the property market to help stimulate the economy. By removing the burden of upfront stamp duty costs, more people will have the means to purchase a home and invest in their future.

The annual property tax will be calculated based on the unimproved land value of the property and will be adjusted annually to reflect changes in the property market. The tax will be paid annually, and the rate will be set at the time of purchase.

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Make sure you crunch the numbers

While the introduction of the annual property tax option will be welcome news for many first-home buyers, it’s important to note that the tax will be ongoing and will need to be factored into the ongoing costs of homeownership. The annual property tax that’s payable will depend on the value of the property and can potentially be higher than the upfront stamp duty cost.

It’s also worth noting that the new scheme is only available to eligible first-home buyers, and not to investors or those who have already purchased a property. Eligible buyers must meet certain criteria, including being Australian citizens or permanent residents, not having previously owned property in Australia, and meeting certain income and price thresholds.

The new scheme is a positive step towards making it easier for people to enter the property market. While the scheme has its pros and cons, it will provide more flexibility for first-home buyers.

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You can make the whole process go a lot smoother by working with an established Sydney conveyancing service. Platinum Conveyancing Services will always put your interests first and won’t add any hidden surprises. We also offer FREE contract reviews in order to alert you of potential property issues before you commit. We welcome you to contact us today.

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