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NSW First home buyer property tax

Date: 19 December 2022

As of Saturday 12 November 2022 first home buyers can opt in to pay an annual property tax rather than stamp duty when buying their first home. The Bill to introduce this measure has completed its passage through NSW parliament and received assent on Friday 11 November 2022.

The Property Tax (First Home Buyer Choice) Act 2022 (NSW) gives first home buyers purchasing a dwelling of up to $1.5 million a choice to either make the land subject to an annual property tax or to pay duty on the transfer of the land instead. For people buying vacant land with the intention of building their first home, the purchase price can be up to $800,000. Keep in mind also that first home buyers are exempt from stamp duty for purchases up to $650,000.

For owner occupiers, the initial property tax rates are $400, plus 0.3% of the home’s land value as determined by the Valuer General. If a property tax dwelling is rented out, an initial investor rate of $1,500, plus 1.1% of land value, applies. These tax rates will remain unchanged during the first 2 financial years of the scheme and thereafter (2024–25 and subsequent financial years) the tax rates will be indexed annually.

Example: Jenny buys her first home on 25 January 2023 for $750,000. If she chooses the annual property tax, it will be calculated on the Valuer General’s assessment of the unimproved land value which for Jenny’s property at this time is $150,000. If she will live in the dwelling the annual property tax will initially be $850 a year. Or if she rents out the property the annual property tax will initially be $3,150 a year. If Jenny instead opts to pay stamp duty up front this will amount to $20,727.

Service NSW has a First Home Buyer Choice Calculator to assist buyers estimate and compare the cost of an annual property tax and one-time stamp duty for existing and new homes. Click here to use the FHB Calculator.

The scheme has been available to eligible first home buyers since Saturday 12 November 2022. Eligible buyers are still required to pay stamp duty on purchases made until 15 January 2023 but will be able to apply for a refund of their stamp duty if they opt into the annual fee. From 16 January 2023 eligible buyers can opt into the annual fee directly without being required to pay stamp duty.

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