It’s official, any Contracts for Sale of Land dated between 11 November 2022 and 15 January 2023 may still be eligible for the First Home Buyers Property Tax.

The Legislation to establish the NSW property tax was enacted on 11 November 2022, making it easier for first home buyers to enter the property market by reducing the up front costs of home ownership.

If you’re a first home purchaser electing to take up the choice of property tax instead of stamp duty and have signed the purchase contract after 11 November 2022 and settlement takes place on or before 15 January 2023, you will still need to pay the stamp duty on or before settlement. However, after 16 January 2023 you can claim a refund of the stamp duty and apply for the annual property tax at the same time. 

The refund of the stamp duty can be used to renovate the property or add to your Mortgage repayments, if applicable.

If you’re an eligible first home buyer signing a contract for purchase on or after 16 January 2023 you will be able to opt in to the property tax before settlement. That means you won’t need to pay stamp duty for your property purchase.

If you are an eligible first home buyer that entered into a contract to purchase a property off the plan on or after 11 November 2021, and intend to use it as your primary place of residence, you may also be able to opt in to the annual property tax scheme. Contact our property law specialists to discuss your individual circumstances.

This scheme is only available to eligible first home buyers. The eligibility criteria for first home purchases under the scheme are:

• Must be an individual over the age of 18 years.
• Have never owned (or co-owned) property in Australia before.
• Have never made a claim for a first home buyers benefit in Australia before.
• If married or de facto, their partner has not owned (or co-owned) property in Australia or received a First Home buyers benefit in the past.
• The property you are buying must be less than $1,500,000.
• You must move into the property within the first 12 months of the settlement date, and live there continuously for a minimum of 6 months. 
• You must have signed the contract for the purchase of the property on or after 11 November 2022.

The property tax is only available on eligible properties. Eligible properties include:

• A house, townhouse, strata unit, flat, duplex valued up to $1,500,000
• Vacant block of resident land intended to be used to build a first home for the purchaser, valued up to $800,000.

Remember that there are still several benefits available only to first home buyers, so you should consider which option suits you the best. As a first home buyer you can access stamp duty exemptions and concessions when purchasing the following types of properties:

• Exemption of stamp duty for existing properties, with a purchase price up to $650,000.
• Concession of stamp duty for existing properties, where the purchase price is between $650,000 - $750,000.
• Eligibility for annual property tax the property purchase price cannot exceed $1,500,000.

Service NSW now has an online calculator to help you work out the financial implications of each type of stamp duty option available to eligible first home buyers.

You must make the decision about opting for stamp duty or the annual property tax before settlement. Once you have made a choice you won’t be able to change your mind. If you are an eligible first home buyer opting to pay the property tax, you must continue to pay the property tax until you are no longer the owner of the property.

If you decide in the future to make your property an investment and it is no longer your principal place of residence, then be weary that the annual property tax will increase to a higher rate each year.

If you have entered a Contract for Sale of Land prior to 11 November 2022 and want legal advice on how you may be able to be eligible for the Annual Property Tax Scheme, contact Hellen Dimas to discuss your options.