Bye-Bye Stamp Duty, Hello Annual Land Tax?
At first glance, saying goodbye to Stamp Duty for first home buyers is a dream, but it comes with a catch.
New South Wales announced that some first home buyers after July 2022, will be legible to chose between paying Stamp Duty on their property, or Annual Land Tax. It’s estimated to cut 2 years off the saving time for first home buyers, on the attempt to rise the rate of home owners.
But what does this all mean? Stick with me, hopefully this can help you understand.
First off, what is Stamp Duty?
Stamp duty is a tax charged by the government on the sale of property. It is designed to cover the cost of the legal documents for the transaction. The main document is the ownership title of the property and a search to ensure you are buying the property from the right person.
The average Stamp Duty for a house in Australia is 3-4% of the property value, however it does vary from state to state. With the average property in New South Wales costing $1,116,889, you would have to pay about an extra $34,000.
So… admin fees. Right. Sure. I’d do anything not to pay that.
What about Land Tax?
Land tax is an annual tax levied at the end of the calendar year on property you own.
This payment is $400 plus 0.3 per cent of your properties value every year.
Let’s say you purchase property at $1.1 million:
- You pay Stamp Duty. To own this property you will have to pay about $34,000 extra.
- You pay Land Tax. To own this property you will have pay $400 plus $3,300 extra.
I know it’s a lot of numbers, but in summary. You can save approx $30,000 on the upfront cost of owning your first place.
All in all, this is a pretty big deal and Western Australia is looking to implement the scheme too! Fingers crossed this helps first home buyers all across Australia get their first property.
You can find more information on the First Home Buyers Choice here: https://www.nsw.gov.au/initiative/first-home-buyer-choice.