With the NSW election coming up later this year, both major parties are presenting plans that will result in a change to he way stamp duty works for first home buyers across the state. As property lawyers in Sydney, our clients are regularly asking us about what this might mean for them.

Both parties are favouring different approaches. For first home buyers, the incumbent Perrottet L/NP government passed legislation last year that allowed first home buyers that are purchasing property under $1.5 million in value to choose between paying an upfront stamp duty, or an annual $400 property tax + 0.3 per cent of the property’s land value.  

Meanwhile, the opposition ALP party, led by Chris Minns, is proposing to eliminate stamp duty on properties of up to$800,000. Furthermore, it would apply a concession rate for those between$800,000 and $1 million. Minns is also promising to repeal the current L/NP legislation if elected.

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L/NP leader, Dominic Perrottet, has previously been highly critical of stamp duty as a tax in general, however, with stamp duty bringing the state around $15 billion per year, he has also said there is nothing that can be done to remove it entirely without federal government assistance. On that basis, if the L/NP were to win the next election, there would likely be no further changes to stamp duty and home purchases, at least for the short term.

Meanwhile, if the ALP were to win it’s important to understand that the elimination of stamp duty would only apply to first home buyers, and it does not apply to vacant property. Only those properties with an existing dwelling will be eligible.

This is the main change being debated. There are, however, some other changes to property tax that buyers should be aware of:

1)     The foreign surcharge for land has increased from two per cent to four per cent

This won’t affect Australian citizens but does affect permanent residents who have not been physically in Australia for at least 200 days in the calendar year. It also affects discretionary trusts without an exclusion for foreign persons.

2)     A surcharge refund for property developers

The surcharge purchaser duty or land tax can be refunded if, after the transfer of residential land, the purchaser then uses the land wholly or predominantly for commercial or industrial purposes .This is a useful benefit for developers and investors that wish to convert residential property for another purpose.

3)     A new equity scheme

Single parents, singles over the age of 50,nurses, teachers and police officers can benefit from a shared equity trial scheme. Through this scheme, the government will contribute an equity share of up to 40 per cent for a new property, or up to 30 per cent for an existing property valued at least than $950,000 in Sydney or other major regional centres across the state. For regional areas, properties valued at less than$600,000 are covered. To benefit from this the gross income of the house hold must be no more than $90,000 for a single person or $120,000 for couples, and the participant must have a minimum deposit of two per cent of the purchase price.

 There is no indication of what will happen to these three changes in the event of a change of government.

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So, what should I do?

 Most of the changes only affect first homebuyers and foreign buyers. If you are in any way concerned by the implications, though, you should contact our expert team of property lawyers in Sydney, and we will walk you through what impact, if any, the changes to the property market will have on you.

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