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The Minns government is set to introduce new legislation to lift the threshold for stamp duty exemptions.
The NSW state government will this week introduce new legislation to bring into effect a higher threshold for stamp duty waivers and concessions for first home buyers.
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Changes to the First Home Buyers Assistance (FHBA) scheme will include raising the threshold for stamp duty exceptions, removing stamp duty for first home buyers (FHB) purchasing a property up to $800,000 (previously $650,000) as of 1 July 2023.
Stamp duty concessions will still apply to purchases of property from $800,000 to $1 million (previously $650,000 to $800,000), however, first home buyers will still pay less. For example, a purchase price of $850,000 will have a stamp duty of $10,023 instead of $33,340 under Labor.
According to the state government, the legislation aims to “improve the integrity and targeting” of FHBA programs and increase the requirement to live in the home from six months to 12 months.
It will reportedly mean that 84 per cent of FHBs will pay no tax or a reduced rate, starting from Saturday 1 July 2023.
The move will bring to an end the former government’s First Home Buyer Choice scheme, which enabled FHBs purchasing owner-occupier properties of up to $1.5 million (or vacant land of up to $800,000) to opt out of paying stamp duty and instead pay an annual property tax. This will cease on 1 July.
Given the impending end of the current FHB Choice scheme, brokers have been supporting borrowers in understanding their options and helping those who could benefit from the policy before the new legislation takes effect.
Wealthful broker Chris Bates told The Adviser that some FHBs who have the ability to purchase a qualifying property before 1 July may find that they would need to find an additional $50,000–$75,000 for stamp duty if the property tax is removed.
He said: “The change does create an opportunity for first home buyers earning over $200,000 to look to purchase prior to 1 July.”
Commenting on the legislation, NSW Premier Chris Minns said: “I understand the stress of trying to purchase your first home. I want more singles, couples and families realising this dream.
“This is a fairer and simpler system to ensure more first home buyers have a chance of owning their first property.”
NSW Treasurer Daniel Mookhey said this will deliver a “key election commitment” to abolish property tax.
“More first home buyers will pay no tax under Labor’s scheme instead of a land tax,” he added.
Regarding the decision, senior tax policy manager Elinor Kasapidis at CPA Australia said while it’s pleasing to see the thresholds increased, “it’s not enough in the long run” and the government is taking a “step backwards by stopping first home buyers from opting out of stamp duty”.
“CPA Australia wants governments to move away from inefficient taxes like stamp duty. There is widespread agreement among tax experts and professionals that stamp duty should be replaced with a smaller, annual fee for all home buyers,” Ms Kasapidis said.
“Stamp duty can be a significant barrier to home ownership. It’s clear from the significant uptake of the property tax option that there is demand for this alternative in NSW.”
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