Options for First Time Real Estate Buyers
From 16 January 2023, first property buyers can choose to pay annual property tax instead of stamp duty when purchasing a property worth up to AUD 1.5 million. Buyers opt in to pay an annual property tax of AUD 400 plus 0.3% of the land value.
The NSW Government has announced that first-time property buyers purchasing properties for up to AUD 1.5 million will be able to choose to pay annual property tax instead of stamp duty. Property tax will only be payable by first-time property buyers when they choose it, and will not apply to subsequent real estate purchases.
This initiative will reduce upfront costs when buying a home and help increase property ownership rates in NSW. With rising home prices, the homeownership rate has dropped from 70% in the 1990s to about 64% today. The decline in real estate ownership is especially evident among young and lower income groups.
The savings needed to meet the upfront costs of purchasing real estate is a significant barrier for many would-be buyers. Removing stamp duty would reduce these upfront costs and take less than two years for many people to save for their first property.
Current stamp duty incentives for first-time property buyers apply to transactions up to AUD 800,000, and these incentives will be maintained. The property tax option will apply to properties priced up to AUD 1.5 million, making it possible for more groups to become first property buyers. Taken together, these measures will support around 97% of all first-time property buyers, or around 55,000 people each year.
cre: nsw.gov.au
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