Stamp duty is one of those imposts that can act as a real disincentive for a first home buyer. You scrimp and save to get a deposit together, find a property you like, go off to the bank for a loan, and then realise you may have to pay up to tens of thousands more to the government once you purchase the property.
Recognising this effect, the NSW government recently announced changes to stamp duty for first home buyers as part of its COVID-19 recovery plan, designed to stimulate both property investment and housing construction.
We’ll offer some more detail on the changes below and also look at stamp duty discounts for first home buyers in Queensland. At Felicio Law Firm, our property law specialists deal with both NSW and Queensland-based clients looking to buy their first property. We can advise you on what to expect in terms of your stamp duty obligation when you purchase property for the first time.
Changes in NSW
The NSW government has announced that between August 1, 2020 and 31 July 2021, stamp duty will no longer be charged on first home buyers who purchase a new home valued at $800,000 or less. Concessions (that is, discounts) on stamp duty apply on properties valued at up to $1 million.
The higher value is an increase from the $650,000 threshold that previously applied, which now only applies to first home buyers purchasing existing homes. First home buyers who purchase a home that is not newly built, therefore, are only exempt from stamp duty if the property is valued at $650,000 or less.
The effect of this change is that there is a distinction drawn between those first home buyers who purchase a brand new home and those who buying an existing home, and is primarily of benefit to those entrants to the market looking to buy off-the-plan. For a first home buyer purchasing an existing home valued at $800,000, you still have to pay stamp duty which will amount to more than $30,000. A concessional rate of stamp duty is available for homes valued at more than $800,000 but less than $1 million.
First home buyers who purchase vacant land on which to build are now exempt from stamp duty if the land is valued up to $400,000, up from $350,000. Stamp duty discounts remain for land valued more than $400,000 up to $500,000.
It should be noted these changes are temporary and expire at 31 July 2021. Also remember that even if you don’t qualify for stamp duty exemption or concession, there are other first home buyer schemes available in NSW, such as the $10,000 First Home Owner Grant for properties valued up to $600,000 (you will also be exempt from stamp duty, as per above). The federal HomeBuilder grant of $25,000 may also be available for newly built homes up to the value of $750,000, depending on eligibility.
Stamp duty in Queensland
In Queensland the First Home Buyers Stamp Duty Concession scheme is also dependent on the value of the property you purchase.
The maximum stamp duty concession available for properties valued up to $504,999.99 is $8,750. For properties valued between $505,000 to $550,000, the concession reduces in steps. If your first property is over $550,000, you’ll pay stamp duty (or transfer duty, as it is officially called in Queensland) at the rate of a normal owner occupier.
If your first entry into the market is to buy a block of vacant land to build on, concessions are available for land valued under $400,000 with a maximum rebate of up to $7,175 for land valued between $250,000 and $259,999.99. No transfer duty is payable on land valued under $250,000.
To be eligible for a first home duty concession when you buy or acquire a property, you must:
- have never previously claimed the first home vacant land concession;
- have never held an interest in another residence anywhere in Australia or overseas;
- be at least 18 years of age;
- move into it with your personal belongings and live there on a daily basis within one year of settlement;
- not dispose (sell, transfer, lease or otherwise grant exclusive possession) of all or part of the property before you move in;
- be paying market value if the residence is valued between $500,001 and $549,999.
To keep the benefit of the first home concession in full after you move in, you must not dispose of all or part of the property within one year. A partial concession may apply if you do so.
As in NSW, you may also be eligible for a Queensland First Home Buyers Grant of $15,000 if you’re building a new home or buying a brand new home, or the Federal government’s First Home Loan Deposit Scheme and the HomeBuilder Grant of $25,000.
Get expert advice
At Felicio Law Firm, it’s our job to be across any changes to stamp duty which affect first home buyers. We have a proud track record of advising clients venturing into the property market for the first time on what exemptions, concessions and other assistance may be available to them.
Property conveyancing is an ever-changing area but we will make sure you have all the information you need to make the best choice when it comes time to purchase your first property. Call us for an initial consultation now on (02) 4365 4249.