If you are a first home buyer then you should be made aware of a recent announcement by the NSW State Goverment which will apply to properties purchased up to $1.5m from 16 January 2023.

As from that date, qualifying purchasers will be able to opt into a scheme to pay a yearly property tax instead of stamp duty thus saving tens of thousands of dollars, at least initially, allowing purchasers to buy their first home that much sooner.

The amount of the yearly property tax can be calculated by clicking on this link:

https://www.service.nsw.gov.au/transaction/calculate-your-property-tax

As an example, for residential land that is owner occupied, the yearly tax will be $400.00 plus 0.3% of the land value.

Property tax assessments will issue once a year and the property tax can be paid either quarterly or in full by the first instalment date. The amount of the property tax payable is indexed to increase by a maximum of 4% per year.

Buyers must reside in the property for at least 6 months but if they switch to using the property as an investment a significantly higher rate of property tax will be payable.

Care must be taken to consider whether the optional property tax scheme is suitable or whether just paying stamp duty up front is the better course.

December 2022