The NSW Labor government has decided to scrap the First Home Buyer Choice Scheme (Choice Scheme) for first home buyers, and introduced a higher threshold of stamp duty as an alternative to the Choice Scheme.
The Choice Scheme was introduced as an option for first home buyers to pay an annual property tax instead of stamp duty, when purchasing properties up to a value of $1.5 million. Similarly to Land Tax, the annual property tax was to be calculated based on the value of the property.
However, the Choice Scheme will officially be abolished on and from 1 July 2023. Eligible first home buyers who wish to take advantage of the Choice Scheme must enter into contracts on or before 30 June 2023, and will have until settlement to elect to opt into the Choice Scheme. First home buyers must not waste any time if they wish to enter into the property market with low upfront costs of purchasing a property and avoid the burden of paying stamp duty upfront.
First home buyers who have already opted into the annual property tax scheme will remain unaffected and can continue to pay that tax until they elect to sell their property. Nearly 5,000 home owners have chosen to opt in to pay this annual property tax. This is largely because the Choice Scheme helped to reduce the upfront costs of entering into the property market and cut up to two (2) years off the time needed to save for the upfront cost of stamp duty.
The NSW Labor Government will be replacing the Choice Scheme by increasing the existing thresholds for stamp duty exemptions for first home buyers from $650,000.00 to $800,000.00. This means that first home buyers with a purchase price of $800,000.00 or less will pay no stamp duty, and concessions apply for homes up to $1 million.
NSW Treasurer Daniel Mookhey said that this revised legislation is a positive result for first home buyers and that “the new thresholds for stamp duty exemptions and concessions are a simpler and fairer way to help more first home buyers than the property tax, which helped a smaller cohort of first home buyers”.
With the introduction of the new thresholds, more first home buyers will pay no tax under the NSW Labor Government’s scheme rather than an annual property tax.
So what does this mean? First home buyers looking to buy their first home may wish to make a move to enter into a Contract to take advantage of the Choice Scheme before 30 June 2023 particularly where the purchase price exceeds $800,000.00. On the other hand, other eligible first home buyers may want to delay purchasing until on and from 1 July 2023 to take advantage of the raised stamp duty threshold.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
