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The First Home Buyer Choice

This government scheme was in place briefly in 2023, but ended when the First Home Buyer Assistance Scheme was expanded. The scheme gave first home buyers the option of avoiding stamp duty in place of an annual property tax.

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By

Rebecca Pike

Updated

*This scheme is no longer in place. It closed for applications on 30 June 2023.*

How did the First Home Buyer Choice work?

The First Home Buyer Choice scheme was available from 16 January 2023 to 30 June 2023. It gave property buyers in New South Wales the choice between paying stamp duty or an annual property tax.

Property buyers traditionally need to pay stamp duty when they buy a home. It is a form of tax charged by state governments, and it applies only when you buy a property, not when you sell it.

Who was eligible for the first home buyer choice?

  • Property up to $1.5m
  • Must be an individual (not a company or trust)
  • Must be over 18 years old
  • You, or at least 1 person you're buying with, must be an Australian citizen or permanent resident
  • You or your spouse must not have previously owned or co-owned residential property in Australia
  • You or your spouse must not have received a First Home Buyer Grant or duty concessions
  • The property you're buying must be worth less than or equal to $1.5 million
  • You must move into the property within 12 months of purchase and live in it continuously for at least 6 months
  • The contract of purchase must have been signed on or after 11 November

Stamp duty versus property tax

Stamp duty is a one-off tax charged when you purchase property. It's based on the purchase price or current market value of your property (whichever is higher).

The annual property tax was a smaller amount paid each year, based on the land value and use of the property.

Annual property tax rates:

  • $400 plus 0.3% of land value for properties whose owners live in them
  • $1,500 plus 1.1% of land value for investment properties.

Let's take a look at 2 hypothetical scenarios:

Scenario 1: Upfront stamp duty is cheaper

Eloise is buying her first property worth $700,000 in a western Sydney suburb. As the house is between $650,000 and $800,000, she is currently eligible for stamp duty concessions. Using Finder's stamp duty calculator, we can see that she would pay $10,490 in stamp duty (excluding other fees like mortgage registration and transfer fees).

She calculates her land tax based on the land value of the property. Assuming a land value of $600,000, she would be paying an annual property tax of $2,200.

As Eloise plans to live in the property for at least the next 10 years, she opts to pay the upfront stamp duty rather than the $22,000 that she would end up paying over her time in the property.

Scenario 2: Annual property tax is cheaper

Kaleb is buying his first property worth $850,000 in NSW. The house is above the threshold for concessions, so he will pay the full amount. Kaleb's stamp duty would cost $33,740 as an upfront cost.

Assuming a land value of $750,000, Kaleb would pay $2,650 a year in property tax.

As he only plans to live in the property for the next 5 years, it is much more cost effective to choose the property tax. Over 5 years, he would pay $13,250 – a saving of more than $20,000.

What happened when a property involved in the scheme is sold?

Stamp duty is only applicable when a property is purchased, not when it is sold. The first home owner selling the property would not need to do anything, but if the next purchaser was a first home buyer they would have had the choice between stamp duty or property tax. Of course, the scheme only lasted 6 months so it's unlikely anyone part of the First Home Buyer Choice sold their property while it was still an option.

Other help for first home buyers

There are several other government schemes that first home buyers can take advantage of:

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Written by

Senior writer

Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products. See full bio

Rebecca's expertise
Rebecca has written 190 Finder guides across topics including:
  • Home loans
  • Cost of living
  • Budgeting

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