In NSW, first home buyers may no longer have to pay stamp duty

Good news! If you’re a first home buyer in New South Wales, some new proposed legislation may mean you no longer have to pay stamp duty when purchasing a property, up to a certain value. 

So what do these changes mean for the property market – and the cost of financing a home loan?

Stamp duty is a compulsory government charge you incur whenever buying a home. Essentially, it’s a tax on the transfer of property from one owner to another. It can be a significant upfront cost for buyers entering the market, on top of any other fees or home loan charges they must pay – often stacking up to $20,000 or more.

Instead, the new proposed scheme from NSW Labor would do away with stamp duty for first home buyers altogether, so long as they’re purchasing a home up to $800,000 in value. Significant stamp duty concessions will also apply for those buying homes worth up to $1 million. 

The changes would deliver on an election promise from NSW Labor Premier Chris Minns, who made the announcement on Monday. 

“This is a fairer and simpler system to ensure more first home buyers have a chance of owning their first property,” he explained, comparing the new scheme to last year’s annual land tax over stamp duty choice offered by the previous Coalition government. 

“I understand the stress of trying to purchase your first home,” says Minns. “I want more singles, couples and families realising this dream.”

This legislation would work in tandem with the new Federal Budget, which expanded access to the First Home Owner Grant to any two persons buying property together and non-first home buyers who haven’t owned property in at least ten years. 

Labor also announced it will work to repeal the Coalition’s annual land tax policy, which gave homeowners the choice to opt into paying an annual land tax instead of stamp duty. If passed, this would do away with the tax scheme for new buyers: the 5,000 properties already locked into it can still pay the land tax until they sell.

So could these changes help first home buyers get a foot in the door? 

Critics argue that reducing barriers to first home buyers, such as stamp duty, will only further drive up property prices – which in turn only locks more people out of the market. 

However, delivering genuine housing reform without impacting home values is incredibly tricky. With the Reserve Bank of Australia likely to hold rates steady this year, the cost of housing finance is set to take off anyway. 

Eliminating drag on someone’s home-buying journey, such as stamp duty, could simplify the process for buyers with the most stacked against them, especially rising interest rates.

“More first home buyers will pay no tax under Labor’s scheme instead of a land tax,” explains NSW Treasurer Daniel Mookhey.

“The new thresholds for stamp duty exemptions and concessions are a simpler and fairer way to help more first home buyers than the property tax, which helped a smaller cohort of first home buyers.”

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