If you’re a first home buyer, you have plenty of reasons to rejoice as the NSW state government has temporarily abolished stamp duty for new homes under $800,000. Stamp duty remained one of the biggest barriers for would-be buyers, but this action, which is a part of the NSW government’s COVID-19 response plan, has delighted Aussies.
Experts believe that this much-awaited extension of stamp duty relief will aid Sydney siders to get into the property market faster. However, it will do very little to boost the overall health of the market. investment Property
What Is Stamp Duty?
It’s a tax that’s levied by the state government on property purchases, and generally, it needs to be paid off within 30 days of settlement. Owner-occupiers in Sydney will have to shelve out about $40,000 in stamp duty if they purchase a property amounting to a million dollars. In Melbourne and Adelaide, it’s even more expensive and can go up to $55,000 and $48,830, respectively. First home loan deposit
For first time home buyers, state governments generally waive stamp duties for homes under a certain threshold. The amount houses buyers will have to pay depend on numerous factors such as:
- The property’s sale price
- Whether they’re purchasing vacant land, a new or established home
- If they’re a first-time buyer
- If they’re an investor or owner-occupier
What Are The New Changes?
The new changes put forward that stamp duty will be relieved for homes under $800,000, and from August 1, 2020, it’ll be discounted for homes up to $1 million. Previously, the limit was set at $650,000. Additionally, the threshold on vacant land will also be lifted from $350,000 to $400,000 and will phase out at $500,000. These changes will last for a period of 12 months starting August 1 and are only applicable for first home buyers purchasing vacant land and newly constructed homes. These changes don’t apply to existing homes. property purchase process
Premier Glady’s Berejiklian believes that this recent move will not just help the purchase of new homes but also boost housing construction throughout NSW and generate employment in the building industry. Treasurer Dominic Perrottet also added that the current plan has already aided over 93,000 first home purchasers since July of 2017. He says that this will also provide the construction industry with extra help to face the challenges created by COVID-19.
The NSW government will also continue with the First Home Owner Grant of $10,000, which is available for people looking to purchase their first home under $600,000 or constructing a first new home or buying land totaling no more than $750,000. The government expects that more than 6000 first-home buyers will be able to benefit from these changes. Coupled with the $10,000 First Home Owner Grant, this could translate to a maximum benefit of $32,335 for first home purchasers.
These new changes go hand in hand with the Home Builder Scheme that offers a grant of $25,000 to owners-occupiers constructing a new home or “substantially renovating” between June 4 to December 31, 2020. It’s estimated that about 27,000 grants will be provided with $10 million in building projects, and supporting 140,000 direct residential construction jobs and another million related jobs as part of the package. local Mortgage Broker
David Bare, executive director of the Housing Industry Association, commented on the increase in thresholds as “long overdue.” He believes that these new changes will open up a much bigger market for families looking to buy their first home, especially at a time where there’s been a significant drop in new home building and new home sales.
How Much Will First Home Buyers Save From These Changes?
Before these new changes came into effect, first time home buyers looking for a property between $650,000-$800,000 had to shelve extra money for stamp duty costs. This meant that if first home buyers wanted to purchase a property amounting to $800,000, they’d still have to save an extra $28,594 for stamp duty on both existing and new dwellings. However, thanks to these new stamp duty relief, fist time home purchasers can save that extra $28,594 that they would have otherwise spent on stamp duty. Not just that, but it’ll also significantly reduce the time taken to accumulate a deposit. If you’re thinking of purchasing your very first home, you must remember that these new exemptions are only applicable for a period of 12 months starting August 1, 2020. local Mortgage Broker
Who Is Eligible For These Stamp Duty Exemptions?
To qualify for these new stamp duty exemptions, you must meet certain criteria such as:
- You must be over the age of 18 and should be a permanent citizen or resident
- You must have never owned a property
- You must have never availed a First Home Owner Grant or Concession
These new stamp duty exemptions introduced by the NSW government has been widely praised by Aussies and experts alike. It’ll certainly help many people purchase their first dream home and generate employment in the home construction sector.