Back in August we discussed the prospective stamp duty reforms in our article entitled, ‘Shift away from stamp duty begins with first home buyers’. By way of update, the relevant legislation, Property Tax (First Home Buyer Choice) Act 2022 (NSW) received royal assent on 11 November 2022 and will take effect from 16 January 2023.
For reference, the reforms stipulate the following:
First home buyers who purchase a property for less than $1,500,000 will be asked whether they want to pay an annual property tax rather than the upfront cost of stamp duty.
The property tax payable will be a fixed annual amount plus a rate applied to the unimproved land value of the property, which will gradually increase over time with indexation.
A first home buyer’s decision to pay an annual property tax will not bind subsequent buyers of the property.
In addition to the annual property tax, duty concessions for purchases up to $800,000 remain available for first home buyers.
For a detailed explanation of eligibility requirements and the calculation of property tax, please see our earlier article.
The legislation also includes a transitional period. Eligible first home buyers who sign a contract for sale between 11 November 2022 and 15 January 2023 are required to pay stamp duty upfront. However, these first home buyers will have an opportunity to opt into payment of the annual property tax by making an application between 16 January 2023 and 30 June 2023, whilst seeking a refund of stamp duty already paid.
For assistance with understanding these reforms, please contact our people.
Ron Zucker 0410 590 111
Eollyn Cortes 0478 727 395
Chelsea Woodward 0404 065 899
Anna Polhill 0431 174 352