New incentives for first home buyers in NSW
Since the first of July 2017, first home buyers in New South Wales have been able to take advantage of a new stamp duty concession scheme. NSW has taken centre stage in the Australian property market as house prices have skyrocketed over the last few years. Many hopeful home owners have felt the sting of being priced out of the market – but with the new scheme in place, the Australian dream of homeownership is back on the table.
Stamp duty concessions
The NSW Government’s push to give first home buyers a leg up in a competitive market starts with a bang – the abolition of stamp duty on houses valued at $650,000 and below. Prior to July 1 2017, stamp duty on a property worth $650,000 would have cost $24,740. This duty is now waived entirely.
For properties worth more than $650,000, stamp duty will be applied gradually up to the maximum value of $800,000. For example, a property in the middle of this price range worth $725,000 would previously have required a stamp duty payment of just over $28,000. With the new incentive this is significantly reduced down to $15,740. Towards that $800,000 price cap, the savings reduce further down.
These stamp duty savings are limited only to first home owners. Experienced property traders and offshore investors are not eligible for the reductions. The goal from a government standpoint is to give first home owners a leg up and these concessions are a great incentive for this demographic to take those first steps on the ladder.
First home owners grant
The scheme is about more than just stamp duty, though. There is also a $10,000 grant available to eligible first home buyers to reduce costs even more and provide an additional incentive for purchasing a home. First home buyers will be eligible for the $10,000 grant when purchasing a new home up to the value of $600,000 or building a new home up to the value of $750,000. It should be noted though that “new home” in this context refers to a property that has not previously been occupied.
Greater taxes for foreign investors
In addition to these measures for getting young Australians into their own homes, there has also been considerable effort in levelling the playing field for these buyers. As investors have greater capital and can often complete property purchases with considerably less financial stress, stamp duty concessions alone aren’t enough to help first home buyers onto the ladder.
Foreign investors will be required to pay a greater surcharge on both stamp duty (from four up to eight per cent) and land tax (from 0.75 up to two per cent). Furthermore, investors can no longer defer stamp duty payments on off-the-plan investment properties. Since first home owners are often faced with staunch, deep-pocketed competition from abroad, this incentive shifts the balance of power back into the hands of young Australians.
What does this mean for first home buyers?
For those looking to purchase in New South Wales, the time is right. Domain’s quarterly state of the market report, June 2017, has shown steadily slowing price growth over the last three quarters for houses in NSW. The state government is also looking to boost the supply – citing a lack of houses as a key contributing factor to the ballooning property prices in the region.
More houses, favourable tax breaks and government grants mean first home owners should consider buying in NSW.
If you’re looking to join the ranks of Australian homeowners, get in touch with Beyond Bank today to find out more about financing your new home.