Are you buying your first home in New South Wales? Congratulations! This is a huge life milestone and a massive step towards achieving the future you want for yourself and your family.
So, how do you begin? To help you along the way, we’ve prepared a handy first-home-buying checklist, which gives first home buyers the understanding they need to make great decisions in the housing market. Read on to discover more.
Stamp duty – particularly in New South Wales – has been all over the news recently. As first home buyers struggled to raise funds needed to get on the property ladder, the NSW government decided to take action. They would get rid of stamp duty for first home buyers – or, at least, they would restructure it to hopefully provide eligible buyers with a better deal.
Is this good news? It sounds like it, but it’s worth drilling down into the details so you know exactly what you’ll need to pay when you buy your first home. Take a look at our guide.
What Exactly is Stamp Duty?
What is stamp duty? This is a one-off tax paid when a document is transferred. This document needs to be stamped – so, if there’s a stamp, you pay stamp duty. This definition is pretty out of date though, and these days, stamp duty generally refers to the transfer of documents during a property purchase.
When you buy a home, you’ll need to transfer the title of the home from the original owner to you. You’ll pay stamp duty on this, and this duty is likely to be a significant cost that adds to the total price of the property purchase.
What’s Changing in New South Wales?
As of January 15th, 2023, first home buyers in New South Wales have a choice when it comes to stamp duty. They can either pay the duty up front as normal, or they can opt instead to pay an ongoing property tax of several hundred dollars per year, plus a small percentage of the value of the land. This choice is available for first home buyers who purchase a property worth up to $1.5 million in value.
According to estimates from the Liberal government of New South Wales that put forward this plan, around 55,000 first home buyers will be eligible to make this decision – or around 97% of the total number of home buyers in the state. The aim is to make it easier for the vast majority of first-time buyers to complete their transactions and achieve a real milestone in life.
But there might be an issue here. The Liberal NSW government is no longer in power, having lost out to Labor in this year’s election. Labor had been vocal in their criticism of the Liberal stamp duty plan, which leaves us in an uncertain position.
What Comes Next?
To understand what might come next in the ongoing saga of NSW stamp duty, we need to think about why Labor was so opposed to the plans in the first place. When they were in opposition, Labor claimed that the Liberal stamp duty plan constituted a ‘forever tax’, essentially forcing first-time buyers to swap an upfront cost for an ongoing one. This, according to Labor, did not really solve the problem at all, only shifted it.
But opposition is quite different to governance. So what will Labor do now that they are in power? One of the pledges the part has made is to remove stamp duty for first-time buyers of homes worth up to $800,000, and reduce it for buyers of properties up to $1 million — which they say constitutes 95% of first home buyers in New South Wales. The numbers here don’t quite add up with the Liberal claims, but let’s put that to one side for a moment. The important fact of the matter is this – Labor has pledged not to replace the stamp duty with another tax, but to remove it altogether, or at least reduce it.
Currently, the Liberal stamp duty reforms are still in place, but this could be the direction NSW moves in the near future, with Labor in the driving seat.
Find the Right Home Loan for Your Situation
Here at Sydney Brokers, we want to help you navigate the often confusing process of buying a home. For first home buyers in NSW, we provide a range of different home loan and mortgage options from some of the state’s leading providers. With our brokerage services on your side, it becomes much easier to find what you need. Reach out today and let’s chat about your options.