What is the new NSW land tax option for homebuyers?
Starting early next year, New South Wales first-time home buyers will have the option to pay an annual land tax instead of the one-off stamp duty.
This new land tax option will allow first-time buyers who are purchasing a property up to $1.5 million (or vacant land for up to $800,000) to opt out of stamp duty and instead pay an annual fee of $400 plus 0.3 per cent of the land’s value.
“For the first time, we will provide first home buyers with a choice, helping thousands of people to shave around two years off the time needed to save for a deposit,” said NSW Premier Dominic Perrottet.
“We want to lower the barriers to owning a home for first-home buyers seeking a place of their own.”
But how does it all work? We detail the potential costs below.
How does the NSW land tax work?
If you buy a $1 million house, the stamp duty will be around $40,000 (based on the purchase price, in this instance). You can work out an estimate for your own situation using a NSW Stamp Duty Calculator .
But if you opt for the land tax option, you’ll pay $400 + 0.3% of the land’s value annually, around $3,400 (assuming the value is the same). So it would take about 12 years for the land tax payments to equal the stamp duty option.
If you’re looking to buy an apartment instead of a house, you could pay less in land tax because the land value tends to be much lower for apartment blocks.
For example, an $800,000 apartment with a land value of $250,000 would require you to pay a stamp duty of about $31,000.
Alternatively, you could pay $1,150 on land tax annually, which is likely to be cheaper for you over say, 25 years.
But if you’re able to pay stamp duty upfront and plan to be in the home a long time, it might make more sense to do so. Meanwhile, a short term buyer might be better off with the land tax option, especially if they planned to only be in the home for five or ten years.
These are decisions that definitely require the advice of a tax or property expert however, so be sure to talk to someone in the know first.
Remember, there are a couple of rules to note. The land tax payable is equal to:
- $400 plus 0.3 per cent of land value for properties whose owners live in them.
- $1,500 plus 1.1 per cent of land value for investment properties.
How do I calculate the NSW land tax?
Let’s recap - to calculate how much you’d pay in land tax you’ll need the following:
- The property’s purchase price.
- The address for the property or estimated land value.
- To provide property usage, i.e. owner occupied or investment.
- To share if it's a new or existing dwelling.
Once you’ve gathered all the information, you can go to the official NSW land tax calculator and plug in your information. Then you’ll receive the estimates of what you may pay if you choose to opt out of stamp duty.
The new land tax option will kick in on 16 January 2023 for first time home buyers in NSW.
If you’re looking to buy for the first time, check out Mozo’s first time home buyer guides. Alternatively, if you’re ready to buy, you can compare home loans below.
Home loan comparisons on Mozo
-
Simple Home Loan Variable
- Owner-Occupied
- Principal and Interest
- LVR>70%
- Interest rate
-
6.19
%
p.a.
Variable
- Comparison rate
-
6.19
%
p.a.
- Initial monthly repayment
-
$4,405
Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.
- Interest rate
-
6.19
%
p.a.
Variable
- Comparison rate
-
6.19
%
p.a.
- Upfront fees
-
$0
- Ongoing fees
-
$0.00
- Discharge fee
-
$175.00
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Offset account
-
no
- Maximum loan to value ratio
- 90.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $3,500,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special offers
- -
Read our Mozo Review to learn more about this First Option Bank Simple Home Loan Variable
Go to site -
Discounted Home Value Loan
- Owner Occupier
- Principal & Interest
- LVR 80-90%
- Interest rate
-
6.39
%
p.a.
Variable
- Comparison rate
-
6.39
%
p.a.
- Initial monthly repayment
-
$4,499
Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
- Interest rate
-
6.39
%
p.a.
Variable
- Comparison rate
-
6.39
%
p.a.
- Upfront fees
-
$0
- Ongoing fees
-
$0.00
- Discharge fee
-
$300.00
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Offset account
-
no
- Maximum loan to value ratio
- 90.00%
- Minimum borrowing amount
- $50,000
- Maximum borrowing amount
- $15,000,000
- Type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special offers
- -
Read our Mozo Review to learn more about this HSBC Discounted Home Value Loan
Your selected home loans
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.