As a first time home buyer in NSW, there’s a good chance you’ll hear about the First Home Buyer Choice scheme (FHBC). As a state with steep property prices Sydney buyers are faced with this headwind; however, this scheme is aimed to help a NSW first home buyer like you get into your first home faster and easier.
But what is the FHBC scheme, and what do you need to know about it? In this blog post we will outline two of the biggest costs when buying land in NSW and how you can take advantage of the FHBC scheme.
Upfront costs of buying NSW land and/or home
| What is NSW Stamp duty on land? Stamp duty on land in NSW, also known as transfer duty, is a tax that’s paid on the purchase of NSW land or property. It’s usually calculated as a percentage of the property sale price. In NSW land stamp duty is paid when you purchase or acquire (without buying): – property (primary or holiday home) – an investment property – vacant land or a farming property – commercial or industrial properties, or – a business, which includes land. Do first home buyers pay stamp duty? Yes. The first home buyer stamp duty must be paid within three months of signing a contract for sale or transfer. | What is land tax? The property tax or land tax is calculated by taking the ‘unimproved value’ of your property – without factoring any buildings or other structures on it – and using that as a base to work out how much tax should be levied. The Valuer-General’s Department provides yearly valuations which determine this site value. Then, the Office of State Revenue ascertains the value of the land based on these valuations. Here are the property tax rates for 2022-23 and 2023-24: – $400 plus 0.3 per cent of land value for properties whose owners live in them – $1,500 plus 1.1 per cent of land value for investment properties. Land tax exemptions apply to homeowners whose principal place of residence or farm is in NSW land valued less than $1 million. |
Land tax over stamp duty on property in NSW
The concession for first time buyer stamp duty applies to both new and existing homes valued up to $650,000. However, according to Corelogic, the current median value for house prices Sydney is at $1.26 million, and $783,046 for apartments.
This far exceeds the zero stamp duty first home buyer NSW limits. The stamp duty NSW first home buyer fee for properties valued at more than $850,000 costs tens of thousands of dollars — and everyone knows NSW is the most expensive state to buy a home in.
On the other hand, NSW land tax is only at $2,948 for properties with million-dollar land value. Side by side, the land tax rate pales in comparison to the stamp duty rate in NSW.
The steep first time buyer stamp duty fees contributed to the decline in homeownership in NSW, and so the First Home Buyer Choice was introduced to help reduce the upfront costs of buying land in NSW.
What is the First Home Buyer Choice scheme?
The FHBC scheme was launched on 11 November 2022 and aims to eliminate the need to save for stamp duty. Under this scheme, a NSW first home buyer who buys a property from 16 January 2023 onwards can now choose between paying for one-off stamp duty and paying for annual property or land tax.
Those who are buying land in NSW between 11 November 2022 and 15 January 2023 will still have to pay stamp duty, but are welcome to apply for a refund when they opt in to property tax.
The FHBC scheme applies to:
- Homes worth $1.5 million; and
- Vacant land valued at $800,000.
Eligibility criteria for the First Home Buyer Choice scheme
To be eligible, you must:
- be an individual (not a company or trust)
- be over 18 years old
- be an Australian citizen or permanent resident (including the person you’re buying with)
- not have previously:
- owned or co-owned residential property in Australia
- received a First Home Buyer Grant or duty concessions.
In addition, the property you are buying must:
- be worth less than or equal to $1.5 million
- be inhabited within 12 months of purchase (continuously for at least 6 months)
Getting a home loan as a NSW first time buyer? Let Stryve Finance help!
If you’re looking into NSW home loans, now is definitely the time to do your research and see if you qualify for the FHBC scheme. And remember, if you need any help along the way don’t hesitate to get in touch with us at Stryve Finance. Our mortgage broker team would be happy to answer any questions and assist you through the home loan application process.
