In 2017, the NSW Government announced that they would be making changes to the assistance that was available to first home buyers in New South Wales. Previously, there was a grant available to those home buyers that purchased a new property. Now, there are concessions on stamp duty for eligible first home buyers. Read on to learn more.
The new scheme commenced in July 2017 and offers generous exemptions or concessions on stamp duty. Whether you get a complete exemption or a partial concession is based on the value of the property that is being purchased.[activecampaign form=7]
To qualify for a complete exemption, the value of the property needs to be below $650,000. This is for both new and existing homes. Once the value of the property exceeds $650,000, concessions to the stamp duty begin to be applied. These concessions stop completely once the value of the property reaches $800,000. Stamp duty is a large expense, so understanding when you could avoid paying it is crucial.
If you are considering purchasing a vacant block of land, the rules are slightly different. In order to receive the full exemption on vacant land, it needs to be valued at less than $350,000. the concessions start from $350,000 and end at $450,000.
With the value of property reaching unprecedented levels, avoiding the cost of stamp duty for your first home can potentially help you get into the property market sooner.
Whilst the value of the property or land is the largest determining factor relating to how much of the concession you could receive, there are other qualifying criteria to be mindful of.
The scheme defines an ‘Eligible Purchaser” as:
A common scenario is that an eligible purchaser’s spouse may have already owned a property. In previous years, this may have disqualified the first home buyer from the scheme. Luckily there is now a provision that allows for shared equity arrangements.
Shared equity arrangements allow first home buyers to buy a property with someone who is not eligible under the scheme. The requirements for this provision is that at least 50% of the property needs to be purchased by a first home buyer that qualifies under the scheme. Stamp duty is then calculated according to the portion of the property purchased by other parties not recognised as an ‘eligible purchaser’. For example, if someone who doesn’t qualify under the scheme purchasers 50% of the property and an eligible first home buyer buys the other 50%, then the stamp duty would be calculated on 50% of the purchase price. This requirement is disregarded if the percentage of the property purchased by someone who is not eligible is below 5%. Check out our Stamp Duty Calculator here.
The limits around the purchase price of the property still apply under the shared equity arrangement.
To apply for either the exemption or concession available under this scheme, you will need to complete this form before providing it to your legal representative (conveyancer or solicitor). They will lodge it on your behalf and arrange for the exemption or concession to be applied. Check out the form for all of the supporting documentation that you will need. Keep in mind that you will need to have already exchanged contracts on the property before lodging the application.
The NSW Government has made available a handy calculator that can help you calculate your concession under the scheme. You can access the calculator here.[activecampaign form=7]
Please note that the information contained in this article was true at the time of publishing (June 2018) however it is subject to change. You should always check with your trusted professional to understand your entitlement to the scheme.
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