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Important Things to Know about Changes in NSW for First Home Buyers

By 9 December 2022January 18th, 2023Conveyancing
Important Things to Know about Changes in NSW for First Home Buyers

Property ownership in Australia has become a major political issue as younger people aspiring to own their own home have mostly been priced out of the market.

Government schemes to support first home buyers to achieve home ownership were introduced a number of years ago and continue to evolve. In NSW, new legislation was passed in November 2022, known as First Home Buyer Choice (FHBC). It allows first-home buyers to pay an annual property tax instead of stamp duty, which prevents many young people from entering the market. The initiative is designed to lower the upfront costs of purchasing a home in NSW and speed up the time in which new buyers can save in order to enter the market. The annual tax option allows a first home buyer to pay $400 plus 0.3 per cent of their property’s land value if they reside in the property (or $1,500 plus 1.1 per cent of land value for investment properties).

The new property tax option will be available for properties up to the value of $1.5 million. The NSW government expects the measure to assist 97 per cent of all first home buyers, or about 57,000 people per year. Existing stamp duty concessions for first home buyers are available for purchases of up to $800,000, and these concessions will continue.

How can someone find out more about FHBC?

The government body responsible for rolling out the new annual tax option for first home buyers is Revenue NSW. It is currently developing new systems, forms and educational materials primarily directed at industry and conveyancing professionals who will be responsible for advising prospective first home buyers about the new scheme.

To this end, Revenue NSW has provided more detailed information about FHBC on its website, while webinars will be offered for relevant parties. A professionals guide is currently being developed and should be available at Revenue NSW’s Resource Centre for Professionals from early December 2022, while the FHBC application form and lodgement guide will also available from mid-December.

The application process

As of January 16, 2023 a new document will be available by which ‘First Home Buyer Assistance’ and ‘First Home Buyer Choice’ applications can be processed.

FHBC applications will be processed as a duties assessment through an electronic duties return (EDR).

For new home buyers currently in the process of settling on a new house, the following information may be relevant ahead of the processing of applications from January 16.

Where a contract is entered into from November 11, 2022 and settlement is occurring before January 16, 2023, duty will need to be paid at settlement through an Electronic Lodgement Network Operator (ELNO).

Any first-home buyer who makes a purchase from November 11 until January 15, 2022 is entitled to apply for a refund of their stamp duty and choose to opt into the tax instead. Refund requests can be applied through Revenue NSW from January 16.

Professionals can lodge relevant forms and supporting evidence through Revenue NSW’s eDuties system on behalf of the purchaser, or purchasers will also be able to lodge relevant forms and supporting evidence directly with Revenue NSW through a portal.

For contracts entered into from November 11, 2022 where settlement occurs on or after January 16, 2023, professionals acting on behalf of a purchaser can process the FHBC transaction through EDR using the new ‘First Home Buyer’ document type from January 16, 2023.

Contracts for off-the-plan purchases signed on or after November 11, 2021 which settle on or after that date may be eligible to opt in to Property Tax, however these transactions cannot be processed through EDR and must be lodged through the eDuties system.

It should be noted that if a property that becomes subject to the property tax because of the first home buyer’s choice is sold, a subsequent owner is not subject to the tax.

More advice on the changes for first home buyers

If you have purchased your first home on or since the announcement of the new ‘choice’ policy in November 2022, or are about to make a purchase and need more information on how the FHBC scheme works, contact our Erina conveyancing professionals at Felicio Law Firm. It’s our job to be across important government policy changes such as this – we can help explain the advantages and disadvantages of choosing the annual property tax option over stamp duty, as well as how the new application process works.

Contact us today if this article raises any questions or concerns.