Buying your first home can be both an exciting and daunting experience. According to NSW policy you must pay transfer duty (once known as stamp duty) when you buy required property, including:

• your home or holiday home.

• an investment property.

• vacant land or a farming property.

But there are several incentives and scheme available to first home buyers in NSW that can make the process easier. The First Home Buyers Assistance Scheme (FHBAS) in New South Wales (NSW) offers valuable support for first home buyers through transfer duty exemptions and concessions. You can get exempt fully or partially if you satisfy these elements.

The FHBAS applies to：

• buying an existing home

• buying a new home and

• vacant land on which you intend to build a home.

Navigating Policy Shifts

Current policy overview:

• For New homes & existing homes:

If you buy a new home valued at less than $650,000, you can apply for a full exemption of transfer duty, with concessions available for homes valued between $650,000 and $800,000.

• For vacant land:

If the land is valued at less than $350,000, you are eligible for a full exemption, and for land valued between $350,000 and $450,000, you can receive a concessional rate.

The most important question for first-time buyers is whether government will introduce a policy to change the threshold this year?

The NSW Labor government has announced plans to revise the stamp duty exemption for first home buyers, with the changes scheduled to take effect on July 1, 2023. Under the proposed policy, the full exemption threshold will increase to $800,000, and concessional rates will be offered for homes valued up to $1 million.

As the Labor government has successfully taken office, there is a considerable likelihood that more lenient policies will be introduced to assist first home buyers. By proactively adjusting the value thresholds for full exemptions and concessional rates, the government aims to make housing more accessible and affordable for first-time purchasers.

Nonetheless, it is crucial to remain up-to-date on any policy changes as they occur since predictions cannot guarantee absolute accuracy.

Understanding the Eligibility Criteria for FHBAS

The FHBAS is designed for individuals who meet specific requirements, as follows:

• Applicants must be at least 18 years old.

• Applicants must not have previously owned or co-owned residential property in Australia.

• Applicants must not have received an exemption or concession under this scheme before.

• The contract date must fall on or after July 1, 2017, and pertain to the entire property.

• At least one first home buyer involved in the purchase must be an Australian citizen or permanent resident.

Here's a simplified breakdown of eligibility scenarios:

1. If you are single and meet the criteria mentioned above, you are eligible for the FHBAS.

2. If you are in a defacto or married relationship, both you and your partner must satisfy the criteria to qualify for the scheme.

3. If you are divorced or separated and purchasing a property independently, you are eligible provided you meet the criteria. However, if you previously co-owned property with your ex-partner, you might be ineligible.

4. If you are buying a property with others who do not meet the eligibility requirements, the FHBAS may still apply if at least 50% of the buyers are eligible. However, if non-eligible purchasers hold more than 5% but not more than 50% interest in the property, the concession will be proportionally reduced according to the interest held by the non-eligible purchasers.

Requirement for living in the property.

Once you've confirmed your eligibility for the FHBAS, there are additional residency requirements you need to fulfill. At least one of the first home buyers must:

• Move into the new home within 12 months of the property purchase.

• Reside in the property for a continuous period of at least six months.

However, there are exceptions to these requirements. To qualify for this exemption:

1. You are a current member of the Australia defence force when buying your first home; and

2. You must also be enrolled to vote in NSW elections; and

3. If you buy with another person who is not a member of the Australian Defence Force, they must be enrolled to vote in NSW elections.

To ensure a smooth application process and adherence to all requirements, it is highly recommended that you seek assistance from a professional licensed conveyancing or property solicitor. This will help you navigate the process with confidence and avoid any potential risks associated with non-compliance. If you have any questions, please feel free to contact us.

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Resources:

• First Home Buyer Assistance scheme, https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme】

• Transfer duty, https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/transfer-duty

• First home buyers have three months until they face a $66,000 budget cut, Tawar Razaghi and Kate Burke, March 31, 2023, https://www.smh.com.au/property/news/first-home-buyers-have-three-months-until-they-face-a-66-000-budget-cut-20230330-p5cwkc.html

• NSW Labor to abolish stamp duty for first home buyers, Alexandra Smith, https://www.smh.com.au/politics/nsw/nsw-labor-to-abolish-stamp-duty-for-first-home-buyers-20230108-p5cb40.html

• Application Form and Lodgement Guide: Exemption or Concession from Duty, https://www.revenue.nsw.gov.au/__data/assets/pdf_file/0007/895354/ODA066A_december_2022.pdf#:~:text=eligible%20purchasers%20must%20together%20acquire%20an%20interest%20of,by%20the%20person%28s%29%20who%20are%20not%20eligible%20purchasers

*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*