First homebuyers in NSW will have the option to pay an annual property tax rather than stamp duty from tomorrow.
It comes after new legislation passed both houses of NSW Parliament yesterday.
Here’s what you need to know.
The NSW Government, like in most other Australian jurisdictions, collects property taxes through ‘stamp duty’.
Until now, in NSW, this has been a one-off payment incurred at the point of sale, made by the buyer when a property is purchased.
The payment has been seen by some as an obstruction to buying property, as it requires greater savings to be made before buying a house.
What’s in the new law?
First-home buyers will now be able to choose how they want to be taxed by the Government for their purchase.
This could be through paying the one-off stamp duty or a new, annual property tax.
The property tax would be a smaller annual payment than the one-off stamp duty, but would take much longer to pay off.
Who is eligible?
The scheme will only be open to first homebuyers purchasing a house costing up to $1.5 million, or $800,000 for vacant land bought to build a home.
To qualify for the scheme, the homebuyer (or their spouse) can’t have ever owned a house in Australia.
First homebuyers will also need to move into the property within 12 months of its purchase, and live in it for at least six months.
It was opposed by the Labor Opposition. NSW Shadow Treasurer Daniel Mookhey has previously said the scheme would create a “forever tax on people’s homes”.
Mookhey added the scheme shouldn’t be pushed through Parliament before the March state election.
Accessing the scheme
People buying their first property from tomorrow will have the choice between stamp duty or the property tax.
They will initially have to pay stamp duty, but can apply for this to be refunded and swapped for property tax from 15 January.
First homebuyers will be able to directly access the property tax from 16 January, and will be able to forego paying stamp duty entirely.