Changes to Stamp Duty: What this means to you
For years, home buyers have been placed with the costly burden of stamp duty involving a large lump sum amount ranging from 1% to 6% of the property price, adding years onto future home buyers saving goals.
As a means of addressing this issue, the NSW Government has introduced changes to this policy where first time home buyers purchasing properties up to the value of $1.5 million will now be given the option to pay an annual property tax rather than stamp duty. Subsequently, the property tax will not be available to other purchasers of property only to first home buyers who choose it.
This new initiative has been designed to lower the overall upfront cost of property purchases, to boost in the rate of home ownership and make this more achievable for first home buyers. Due to homebuyer’s attraction to the ideal NSW lifestyle, home prices have been dramatically rising, making it even harder to purchase a property. Therefore, home ownership has declined from around 70% in the 1990’s to a low 64% today. This drop in home ownership has unsurprisingly been more evident surrounding the lower age and lower income groups.
With inflation and further increasing home prices, saving the required amount of money for purchasing a property or applying for a loan is steadily proving to be a more challenging barrier for many would-be-purchasers to tackle. This initiative of removing the obligation to pay stamp duty, will reduce these upfront costs and the amount of time needed to save for a home by up to two years.
Stamp duty concessions up to $800,000 are available for first time home buyers, contrastingly, the property tax option will be available for property purchases of up to $1.5 million. This removal of a reduced upfront sum and the implementation of a smaller annual deduction looks to help a broader group of people to become first time home buyers, accommodating around 97% of first-time home buyers.
For more information on these changes, visit https://www.nsw.gov.au/initiative/first-home-buyer-choice