Existing stamp duty concessions for first-time home buyers are available for purchases up to $800,000, and these concessions will continue. The property tax option will be available for properties up to $1.5 million, helping a broader group become first-time home buyers. Overall, these measures will support about 97 per cent of all first-time home buyers, or about 57,000 people per year. However, if (interestingly) a buyer who has chosen to pay the annual property tax sells the property quickly (for example in a few years), then there is no obligation for him to pay an additional amount on top of the amount of stamp duty that would have been payable if the buyer had chosen to pay the full stamp duty on the purchase of the property. In addition, the property tax payable will not be tied to the land in a subsequent sale – it will be removed from the property. What do the changes to stamp duty mean for first-time buyers? First-time home buyers in New South Wales can now choose between paying an annual property tax or advance stamp duty on their property after Dominic Perrottet`s tax reform passed in Parliament. Perrottet`s earlier proposal called for a membership model to gradually move all properties into the property tax system. Once someone chooses to pay property tax instead of stamp duty on a property, it is subject to property tax even after it is sold. “Those who buy a home to live in for life can still choose stamp duty, but for many it makes more sense to pay an annual tax for the limited time they actually live in the property,” he said. This is an idea worth pursuing because stamp duty is a very inefficient and unproductive tax. Instead of following the New South Wales approach, other premiers should look zealously as a reformist ACT, which is now over 10 years in a 20-year plan to phase out stamp duty through a broad-based property tax. Perrottet, who has long called for stamp duty reform, said the policy would allow people to save more.

Analysis by the New South Wales Treasury shows that the break-even period between the pre-stamp tax and an annual property tax would be 36 years for an $800,000 apartment, 28 years for a $1 million townhouse and 26 years for a $1.25 million house. Eligible first-time home buyers will be able to access the program starting Saturday, and while they will have to pay stamp duty on purchases by Jan. 15, they can apply for a stamp duty refund if they opt for the annual fee. NSW offers first-time buyers the option to pay annual property tax instead of stamp duty when they purchase a property worth up to $1.5 million. Premier Dominic Perrottet said buyers will now be able to choose between a lower annual property tax or stamp duty in advance on their first home. “From 16 January, first-time buyers who opt for the annual payment will no longer have to pay stamp duty at all.” Replacing stamp duty with the ability to pay an annual property tax reduces barriers that prevent people from moving to another city to seek better employment opportunities. For example, there are often better employment opportunities in larger centres, but housing costs in these areas can be prohibitive for workers. The historic new laws will allow a first-time home buyer to opt for a property tax on properties under $1.5 million and pay an annual levy of $400 plus a 0.3 per cent tax on the value of their land. The replacement of stamp duty with property tax is an extraordinary policy reform for the housing sector that the current Premier of New South Wales, Dominic Perrottet, has long championed.

The option is limited to homes valued at less than $1.5 million and undeveloped land designated for the construction of an initial home valued at less than $800,000. Another provision of the Act also means that once a property owner pays property tax, prospective owners retain the ability to pay stamp duty. After talking about the prospects for stamp duty reform over the past two years, New South Wales Premier Dominic Perrottet`s grand plans ended less with a bang than a whimper. You can use the First-Time Home Buyer`s Choice Calculator to check your eligibility. You will receive a comparison of the estimated property tax (for the first year) and the transfer tax (stamp duty). The plan is expected to cost the New South Wales Government nearly $730 million over four years and is seen as the first step in a broader effort to eliminate stamp duty altogether, as was the case in the ACT.