As part of the COVID-19 recovery plan for NSW, the state government has granted more first home buyers a reprieve from paying stamp duty on their new home. This change is expected to help more than 6000 Australians afford to buy a new home.
For the next 12 months, first home buyers will not have to pay stamp duty on new home purchases valued up to $800,000. This translates into an upfront saving of up to $31,335.1 A stamp duty concession will be available for homes valued above $800,000, with the concession amount gradually reducing as the purchase price increases, up to a maximum of $1,000,000. The stamp duty exemption threshold for vacant land will also increase to $400,000, with a concession available for land valued at up to $500,000.
This relief program is scheduled to cost the state government around $78 million in revenue. It should encourage first home buyers to purchase a new home over the next 12 months and boost demand for construction. The government hopes the changes will support the struggling housing construction industry and help create more building jobs.
Who will it impact?
The new stamp duty rules only apply to eligible First Home Buyers (FHBs). Generally speaking, this means you must be an Australian citizen or permanent resident, at least 18 years of age and not have owned residential property in Australia before. You must also move into the home within 12 months and live there continuously for at least six months. If you meet the eligibility criteria, you can access this scheme regardless of income (i.e. it is not means tested).
What property types are eligible?
The above stamp duty exemptions and concessions are only available for newly built homes or vacant land purchased between 1 August 2020 and 31 July 2021. They are not available for the purchase of existing homes.
Financial assistance available for FHBs in NSW
There are now four different schemes that may assist first home buyers in NSW purchase a home:
- First Home Buyer Assistance Scheme. In addition to the new stamp duty thresholds for new homes, eligible applicants do not have to pay stamp duty on existing homes valued up to $650,000. A stamp duty concession is available for existing homes valued up to $800,000.
- First Home Owner Grant (FHOG). Eligible applicants can receive $10,000 towards the cost of a new home. This is available for newly constructed or substantially renovated homes valued up to $600,000, or where the purchase of vacant land plus the construction of a home is valued less than $750,000.
- First Home Loan Deposit Scheme (FHLDS). Eligible applicants can now purchase a new or existing home with a deposit of just five per cent of the value of the property and not have to pay Lenders Mortgage Insurance. This is available for properties valued up to $700,000 in cities and regional centres, and up to $450,000 elsewhere in the state. Income limits apply.
- HomeBuilder Scheme. Eligible applicants (FHBs included) can receive $25,000 towards the purchase of a new home valued up to $750,000. This grant is only available until 31 December 2020 and income limits apply.
How much can you save?
The table below shows how much you could save as a first home buyer using the various government assistance measures. They can be used in conjunction with one another, provided you satisfy all the eligibility criteria for each scheme.
*Land and property must be valued less than $750,000.
**Income limits apply and land and property must be valued less than $1,500,000.
***Based on an LVR of 90% and city location. Income and location limits apply.
^Concession calculation unavailable
Your Smartline Mortgage Adviser can help you determine if you are eligible for one or more of these schemes and how to apply for them in conjunction with the loan application process.
1Stamp duty payable on an $800,000 home prior to the change.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.