The NSW Government has announced that first home buyers purchasing properties for up to $1.5 million will be able to choose to pay an annual property tax instead of stamp duty. The property tax will only be payable by first home buyers who choose it and will not apply to subsequent purchasers.
Existing stamp duty concessions for first home buyers are available for purchases of up to $800,000, and these concessions will continue. The property tax option will be available for properties for up to $1.5 million.
If you are eligible, you can choose between (a) paying the usual amount of stamp duty based on the ‘dutiable value’ of your property; or (b) paying an annual property tax based on the unimproved land value of the property.
The annual property tax payments will be based on the land value of the purchased property. The property tax rates for 2022-23 will be:
- $400 plus 0.3 per cent of land value for properties whose owners live in them
- $1,500 plus 1.1 per cent of land value for investment properties.
These tax rates will be indexed each year, so that the average property tax payment rises in line with average incomes.
The Government intends that legislation to establish the property tax will be introduced into the NSW Parliament during the second half of 2022.
Eligible first home buyers who sign a contract of purchase on or after 16 January 2023 will be eligible to opt into the property tax and will not be required to pay stamp duty in order to complete their transaction.
Eligible first home buyers who sign a contract of purchase between the passage of the legislation and 15 January 2023 will be eligible to opt into the property tax. However, these purchasers will be required to pay any applicable stamp duty within the usual required periods and from 16 January 2023, will be able to apply for and receive a refund of that duty.
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