The new Liberal government of NSW, led by Premier Barry O’Farrell, recently released their first budget for the state of NSW. As part of cutting spending to help fund long promised infrastructure, the state treasurer Mike Baird has ditched stamp duty concessions for first home buyers of established properties.
This should not affect established property investors, but for those getting into their first home it will add $15,000 to $20,000 to their purchase price.
Previously, first home buyers could claim an exemption on stamp duty for properties with a purchase value of up to $600,000.
Stamp duty is a state based tax charged on the transfer of land or business.
First home buyers have until 1st of January 2012 to still receive the stamp duty discount on established homes, but will continue to receive discounts for newly built, off the plan and under construction properties.
The “First Home Plus” scheme which allowed first home buyers to apply for the discount, will now be replaced with the “First Home – New Home” scheme. The new scheme will cover new properties worth up to $600,000 (up to $500,000 no duty is payable) and up to $450,000 for vacant land (up to $300,000 no duty is payable).
This exemption for new and under construction properties is to keep the building industry stimulated as well as encouraging more supply into the NSW market.
For more information about the updated scheme, go to the OSR First Home Scheme FAQs.
Effect on Prices
Sydney is already the most expensive city in Australia for property and currently holding it’s value compared to other capital cities around the country. Still, since there is only 3 months to the deadline of the old scheme, there may be a small surge in purchases of properties under the cut-off limit.
But I can’t see a big spike coming.
With the economy already looking very volatile, it is unlikely that this change will have much lasting impact on NSW property prices. If anything, there may be a small spike leading up to Christmas on sub $600k homes.
Stamp Duty Amounts
Here are some examples of the amount of stamp duty payable for property transfers in NSW. These have been calculated using the stamp duty calculator available at the Office of State Revenue:
NSW Office of State Revnue Transfer Calculator
As of time of writing, you will pay the following amounts for Stamp Duty on a property.
Stamp Duty on a $250,000 property is $7,240.
Stamp Duty on a $500,000 property is $17,990.
Stamp Duty on a $750,000 property is $29,240.
Stamp Duty on a $1,000,000 property is $40,490.
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