From 1 July this year, the former government’s stamp duty reforms have been repealed. Under the new policy, NSW first home buyers can now access expanded stamp duty exemptions and concessions. First home buyers purchasing property valued at up to AUD $800,000 are exempt from stamp duty, and concessions are available for purchases of property valued up to AUD $1,000,000.

If you are purchasing vacant land and intend to build a home on it, you may be eligible for an exemption on land valued up to AUD $350,000, and a concessional rate on land valued above AUD $350,000 and below AUD $450,000.

For specific details, please refer to the table below.

On 16 January this year, the former NSW Liberal government introduced stamp duty reforms that allowed first home buyers to choose between paying stamp duty as a one-off lump sum or paying an annual property tax. This policy applied to first home buyers, and the purchased property value could not exceed AUD $1,500,000.

Under the NSW Liberal government’s policy, buyers could avoid paying a lump-sum stamp duty of up to AUD $66,000.

Under the previous Liberal stamp duty reform policy, the government gave first home buyers purchasing new or existing homes valued at AUD $1,500,000 or less a choice between paying a one-off stamp duty or paying an annual property tax. The same policy applied to first home buyers purchasing vacant land, provided the land would be used to build a home valued at AUD $800,000 or less.

If the annual property tax option was chosen, in the 2022-23 and 2023-24 financial years, buyers would pay a property tax of AUD $400 plus 0.3% of the land value of the property, with land values determined by the NSW Valuer General. From the 2024-25 financial year onwards, the property tax rate will change annually, but the government will ensure first home buyers can afford the property tax. The rate system will ensure that the average property tax payment stays in line with Gross State Product per capita. Over the past 15 years, Gross State Product per capita has grown at an average annual rate of 3.2%. In addition, legislation caps the annual increase of the property tax rate at no more than 4%.

However, these policies changed from 1 July this year.

To apply for the First Home Buyer Assistance Scheme, the following conditions must be met:

• The purchase must be a new or existing home in NSW, or vacant land in NSW
• The property value must not exceed the amounts mentioned above — that is, first home buyers purchasing property valued up to AUD $800,000 are exempt from stamp duty, and concessions are available for purchases of property valued up to AUD $1,000,000
• The purchase must involve the entire property
• The buyer must be an individual (not a company or trust*)
• The buyer must be at least 18 years of age
• The buyer and their spouse must never have previously owned or jointly owned residential property in Australia
• The buyer and their spouse must never have previously received an exemption or concession under this scheme
• At least one of the first home buyers must be an Australian citizen or PR
• Whether the property is a new home or an existing home, the residency requirement must be met (see below)

If purchasing a new home or an existing home, the following residency requirements must be met:

For contracts entered into between 1 July 2017 and 30 June 2023 (inclusive)

One of the first home buyers must:

• Move into the home within 12 months of purchasing the property, and
• Live in the property continuously for at least 6 months.

However, take note for contracts entered into after 1 July 2023!

One of the first home buyers must:

Move into the home within 12 months of purchasing the property, and

Live in the property continuously for at least 12 months — this is the key point, meaning an additional 6 months of residency is required

Final Thoughts

Australia’s property-purchase policies are constantly changing, and buyers may encounter many issues when making such a major investment — for example, does this concession still apply if you purchase property together with someone who does not meet the eligibility requirements? We strongly recommend consulting a professional lawyer for advice, to avoid suffering significant losses due to missed policy changes.