First home buyers looking to make the most of the stamp duty exemptions for existing dwellings in NSW before they expire should think twice before diving into the property market.
PRDnationwide research analyst Oded Reuveni Etzioni said while there is a clear advantage for first home buyers aiming to purchase an existing dwelling in the next three weeks, the figures demonstrate that understanding the market and where it is heading is much more important.
"We see the purchase of real estate as a long-term investment and therefore suggest that first home buyers conduct a thorough research of the market and make sure they buy at the right price," Mr Etzioni said.
"This will help to ensure that the longer term movement of the market will not erase the short-term impact of stamp duty savings."
According to the NSW Office of State Revenue, the 'normal place of residence' rule will continue to apply, requiring first home buyers to "occupy the home as their principal place of residence for a continuous period of six months commencing within 12 months from completion of the agreement."
Mr Etzioni said some people were uncertain as to the differences between the 'First Home Plus' Scheme and the new 'First Home – New Home' Scheme that is due to start in the New Year.
The 'First Home Plus' scheme currently in place provides a tax duty exemption for first home buyers in NSW, with full exemption on homes valued up to $500,000 and partial exemption for homes valued between $500,000 and $600,000. Purchasers of vacant residential land currently enjoy a full exemption for lots valued $300,000 or less, with a concession on duty for lots valued between $300,000 and $450,000.
According to PRDnationwide, the new scheme will be implemented for property exchanged as of 1 January 2012 and will apply to newly built homes, homes bought off the plan and vacant lots, with existing dwellings receiving no exemption under this scheme. "In implementing the new scheme, the government is attempting to stimulate the construction of new dwellings by making them more attractive to first home buyers. Exemption will also be given to vacant residential lots transacting for $300,000 or less, with a partial exemption given to lots valued between $300,000 and $450,000. Dwellings and land selling above the specified amounts will receive no exemption."
Savings of $17,990 for a newly built home worth $500,000 or $8,990 for a vacant block of land worth $300,000 equates to 3.5 per cent of the total value (including the stamp duty) for the former and 2.9 per cent for the latter, the company said.
"This may appear like a substantial amount of money but in reality represents only a negligible amount of the total cost involved in the purchase a house or unit, which can be erased almost instantly should the market turn south," Mr Etzioni said.