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2 in 3 FHBs will say no to stamp duty, says NSW government

By Grace Ormsby
01 November 2022 | 12 minute read
Matt Kean reb

Up to two-thirds of first home buyers will choose to pay a smaller annual property fee rather than forking out for stamp duty upfront, according to new NSW Treasury analysis.

It’s due to the likelihood that this buyer cohort — especially those spending between $800,000 and $1.5 million — will have shorter holding periods and therefore, lower overall tax payments, Treasurer Matt Kean said.

The analysis was contained within NSW Treasury’s submission to a state parliamentary inquiry, which indicated that half of all owner-occupiers sell their property within 10.5 years of purchase, while about two-thirds of owner-occupiers sell their properties within 20 years.

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NSW Treasury expects first home buyers (FHBS) to have shorter holding periods than this. According to the department’s calculations, “under reasonable assumptions, the break-even period between upfront stamp duty and an annual property fee would be 36 years for an $800,000 apartment, 28 years for a $1 million townhouse, and 26 years for a $1.25 million house”.

Mr Kean said the reform would “not only help first home buyers get the keys to their home sooner but will also result in many first home buyers paying less overall”.

From his perspective, it’s about choice — and affordability: “For example, if they bought a $1 million house and sold it 10 years later, which is around the median period, the annual property payments over the 10 years would total $19,881 in present value terms compared with $40,090 in upfront stamp duty. That’s a saving of $20,209.”

The Treasurer stated that “most people purchase a home more than once during their lives, so it will make sense for many first home buyers to choose a smaller annual fee for the limited time they spend in their first property, rather than a lump sum of stamp duty”.

He also touted how the First Home Buyer Choice also benefits first home buyers by lowering upfront costs of home ownership, and “slashing the time required to save for a deposit by about two years”.

The First Home Buyer Choice is currently in front of the NSW Parliament, with the government reporting that the bill is set to be debated by the upper house over the coming week.

Even with the new scheme coming into effect, existing first home buyer stamp duty exemptions and concessions for purchases under $800,000 will continue to apply, the Treasurer has assured. 

ABOUT THE AUTHOR


Grace Ormsby

Grace Ormsby

Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.

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