NSW Stamp Duty – the Labour Government Rings the Changes:
After almost a year of political to-ing and fro-ing, the status of stamp duty in New South Wales is about to undergo yet another shakeup. NSW’s leader Chris Mimms – who is only months into his premiership after a victorious campaign in this year’s elections – has announced Labor’s plans for stamp duty in the state.
The biggest change is to the First Home Buyer Choice (FHBC) scheme, launched by the previous Liberal government at the beginning of the year. From July 1st, this scheme will be scrapped. This scheme essentially gave first home buyers an option – pay the lump sum stamp duty on their property transaction, or pay an annual property tax instead – but Labor were vocal opponents of this idea.
Changes to Stamp Duty from July 1st
Now that Labor are in power in NSW, they are introducing legislation to change the first property buying process. As well as scrapping FHBC, this legislation will raise the threshold on stamp duty exemptions already in place – currently, the exemption threshold is at $650,000, but this rises to $800,000 under the new legislation. First home buyers will pay a concessionary stamp duty rate on homes priced between $800,000 and $1 million.
The July 1st deadline will, at least, offer a degree of certainty to first home buyers in NSW. Liberal leader Dominic Perrottet first announced FHBC back in June 2022, launching the scheme on January 16th, 2023, but his party’s defeat at the 2023 state elections threw everything into doubt. Mimms and Labor had never been fans of the scheme, and more big changes looked to be on the horizon. Now we know what those changes are going to be.
Labor: ‘A Better Situation for First-time Buyers’
Chris Mimms was keen to outline how his party’s plans would benefit first home buyers in NSW. Mimms and his Labor colleagues had criticised the FHBC scheme as essentially taking advantage of those struggling to pay stamp duty, locking them into what Labor treasurer Daniel Mookhey termed a ‘forever tax’.
The NSW premier explained that Labor’s concessions scheme would benefit 84% of first home buyers in the state, giving the vast majority the opportunity to pay a reduced rate (on properties between $800,000 and $1 million in value) or nothing at all (on properties priced below $800,000). He also said that the property benefits schedule will be restructured so that first home buyers in the most need will have access to the lion’s share of the benefit. Under the Liberal plan, he said, those purchasing top-of-the-range properties were receiving disproportionate benefits, and this needed to be addressed.
Other changes include extended habitation requirements for those benefiting from the scheme. Buyers who qualify for the reduced rate, or for an exemption, must remain in their home for a minimum of 12 months – up from six months under FHBC.
First Home Buyers Hope for an End to the Confusion
Lots of figures have been thrown around over the past year, and first home buyers have been left a little confused. Mookhey has stated that Labor’s plans will help a greater proportion of NSW first-time buyers compared to the Liberal scheme. But the 84% figure is somewhat lower than the 95% that was trotted out earlier this year. Perrottet actually claimed that the Liberal scheme would benefit 97% of buyers, so it’s difficult for these property purchasers to know quite what they should believe.
However, reports suggest that most first-time buyers will be better off under the Labor plans. According to the party, first time home buyers purchasing an $800,000 property can expect savings of up to $31,090 – a substantial chunk of money that could make a real difference.
But what about those who have already purchased property under the FHBC scheme? Labor have said they will put grandfathering provisions in place so that these buyers will continue to pay the annual tax in exchange for the right to waive stamp duty. The idea is to maintain the validity of property transactions made over the last five months while leaving the way clear for wholesale changes to stamp duty from July onwards.
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