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More than 55,000 Australians have used an online calculator to understand their options under the NSW First Home Buyer Choice scheme.
The first home buyer scheme, which came into effect 16 January, enables buyers to opt out of paying stamp duty in favour of a property tax.
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Eligible first home buyers (FHBs) are now able to ditch upfront stamp duty in favour of a smaller annual fee on properties purchased up to $1.5 million, while those who’ve bought in the last two months can now apply for a refund.
Under the scheme, eligible first home buyers who bought after 11 November 2022, can opt in to the annual fee and will receive a stamp duty refund within 10 business days.
To be eligible for first home buyer property tax, FHBs must move into the property within 12 months of purchase and live in it for six continuous months.
Premier Dominic Perrottet said it “brings a new choice for first home buyers”.
“Our plan means first home buyers will shave years off the time needed to save for a property and will help them achieve their home ownership dreams,” Mr Perrottet said.
He said it will help to reduce upfront costs, the time needed to save for a deposit and help first home buyers pay less tax overall.
First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000, with concessions also remaining in place for properties between $650,000 and $800,000.
The NSW scheme gives the following example to demonstrate how this could work: “Ranit is buying his first home, a $1.2 million townhouse in Newcastle. The land value of this property is $720,000.
“Stamp duty on this purchase is $50,875, and the purchase price is above the threshold for any first home buyer stamp duty concessions.
“In 2022–23, property tax on the property would be $2,560.
“Ranit is not sure how long he will own the property, but he has heard that half of all owner-occupiers sell their property within about 10 years.
“Not having to pay stamp duty would really help to lower the upfront costs of the purchase, so Ranit chooses the property tax.”
Indeed, the scheme benefits those who plan to sell within 10–15 years, thereafter the cost of the property tax could work out more than the stamp duty in the first place.
The state government’s comparison tool, that allows borrowers to compare the costs of both options, has tracked more than 56,000 calculations since it was launched in October 2022.
The move forms part of a multibillion-dollar housing package announced in the 2022–23 NSW budget to deliver “quality, accessible and affordable” housing across NSW.
The government said the property sector had been engaged and briefed on the program.
[Related: NSW property tax options starts today]
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