Buying Buying Property Investment

‘First Home Buyers Choice’ Scheme Launches

Is 2023 the year you purchase your first home? The home ownership dream may have just gotten a little closer for first home buyers with the NSW Government’s ‘First Home Buyer Choice’ scheme launch. The scheme aims to replace stamp duty with a smaller annual property tax and give buyers the option to choose if eligible. Read on to find out more about the initiative that launched on January 16 2023 and how it could help you get into the property market this year.

According to the NSW Government, the First Home Buyer Choice optional could lower the upfront costs of your purchase and cut up to 2 years off the time needed to save for a deposit. But what’s the difference between the two? Stamp duty is an upfront payment, paid at the time of buying your home and is calculated as a percentage of the purchase price of current market value – Whichever is higher. However, the annual property tax payments are based on the land value of the purchased property. The rates  for 2022-2023 and 2023-2024 will be: 

  • $400 plus 0.3% of land value for properties whose owners live in them 
  • $1500 plus 1.1% of land value for investment properties. 

“This national-first will significantly reduce up-front costs, reduce the time needed to save for a deposit and will see most first homebuyers pay less tax overall”

– NSW Premier, Dominic Perrottet

So who’s eligible? To be eligible for the first home buyer choice scheme: 

  • you must be an individual (not a company or trust)
  • you must be over 18 years old
  • you, or at least one person you’re buying with, must be an Australian citizen or permanent resident
  • you or your spouse must not have previously owned or co-owned residential property in Australia, nor received a First Home Buyer Grant or duty concessions
  • the property you are buying must be worth less than or equal to $1.5 million
  • you must move into the property within 12 months of purchase and live in it continuously for at least 6 months
  • you must sign the contract of purchase on or after 11 November 2022.

The good news for those who purchased a property on or after November 11, enables first home buyers to apply for a refund of their stamp duty and pay an annual fee instead. The government is promising that the refund will be processed within 10 business days.

Buying-property-in-2023

The property must also meet the requirements for you to be eligible for the scheme and must either be a house, townhouse, strata unit, company title unit, flat, duplex or a vacant block of residential land intended as the site of a first home. 

Further Property Requirements Include:

  • A property is not eligible if it includes a business or business premises or is the site of a holiday home. 
  • The value of the property (dwelling) you’re buying must not exceed $1.5 million. If you’re buying vacant land, it must not exceed the value of $800,000. 
  • You must move into the property within 12 months of purchase and live in it continuously for at least 6 months.

For example: 

Julie purchases a townhouse in NSW after November 11 2022 for $850,000 and qualifies for the scheme as she meets all the relevant criteria. She opts in for the annual property tax and moves into the property following settlement. Julie will pay approx. $2,950 per year in annual property tax, instead of an upfront stamp duty fee of over $33,000 at the time of purchasing the home. 

Which option is right for you? 

It depends on your individual situation! There are Government online tools to help you get an estimate of costs associated with your purchase to determine what is right for you. Follow the link here to use the First Home Buyer Choice calculator.

We recommend seeking independent financial advice to ensure that you are making an informed decision that is tailored to you. 

Looking to invest in property in 2023? Get in touch with us here and we’d love to help you find your dream home.

 

Jordy Woolley
dynamic | innovate | style Jordy’s journey at Molenaar and McNeice epitomises the spirit of innovation. She first joined us as an experienced property manager where she hit the ground running with her fierce drive to redefine what property management can look like. Less than 12 month...View Profile ›
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