Insight

25.08.20  Buying Tips

 

NSW Stamp Duty Cut For First Home Buyers

The NSW government has cut stamp duty for more first home buyers. How will it affect you if you want to buy your first home in the eastern suburbs?

The NSW government has announced new cuts to stamp duty for first home buyers who purchase new and off-the-plan properties. We look at what they mean for you if you’re looking to get on the property ladder in Sydney’s eastern suburbs.

How the government stamp duty cuts work

The NSW government already waives stamp duty for first home buyers who purchase property valued up to $650,000. It then applies a concessional rate to any property first home buyers purchase between $650,000 and $800,000.

However, it has now increased these thresholds for new and off-the-plan properties to encourage construction and help more buyers into the market. These changes apply to property bought after 1 August 2020 and should last 12 months until August 2021.

Now, first home buyers will be exempt from stamp duty where the property value is below $800,000 and then receive concessions up to $1 million, so long as the property is new or off-the-plan. First home buyers who purchase an established home still receive stamp duty exemptions and concessions at the previous rates.

Stamp duty has also been cut on vacant land and house-and-land packages, although few properties here in the Eastern Suburbs fit into these categories.

How much stamp duty could you save?

Stamp duty can be expensive and a real obstacle to first home buyers getting on the market. In fact, it’s the biggest cost most home buyers face when they buy property other than a home deposit.

While the government hasn’t yet released full details of the concessional rates, it has released the following table showing how much first home buyers can expect to save.


New property value

Current stamp duty

New stamp duty

Saving

$700,000

$10,445

$0`

$10,445

$800,000

$31,335

$0

$31,335

$900,000

$35,835

$20,168

$15,668


* Source: https://www.nsw.gov.au/media-r...

The year of the first home buyer?

This comes on top of other first home buyer benefits such as the State First Home Owner Grant and the Commonwealth Government’s First Home Loan Deposit Scheme (FHLDS), both of which aim to make it easier to get on the property ladder. The FHLDS guarantees part of first home buyers’ deposits, so they don’t need to take out lenders mortgage insurance, potentially even with a 5% deposit.

Working together, these schemes can make it a lot easier for first home buyers to get into the market. For instance, a home buyer purchasing an $800,000 new property without government assistance would usually have to pay stamp duty of $31,355. They would also have to save a deposit of $160,000 to avoid lenders mortgage insurance of around $10,000. This means they’d need to save $191,335.

Now that same buyer could potentially buy their first home without paying stamp duty and with just a 5% deposit. That means they’d only need to have saved $40,000.

What can you buy in the eastern suburbs?

While real estate in Sydney’s eastern suburbs doesn’t come cheap, there are still properties you can buy that would let you take advantage of the NSW government’s cuts to stamp duty.

Units are a realistic starting point. For instance, these suburbs all have a median apartment price that’s $1 million or less according to realestate.com.au.

Surry Hills: $875,000

Potts Point: $757,500

Elizabeth Bay: $912,500

Centennial Park: $754,000

Kensington: $882,750

Paddington: $850,000

Bondi Junction: $1,000,000

Randwick: $990,000

What we’ve sold that would qualify for concessions or exemptions

If buying your first home is on your horizon, don’t hesitate to get in touch with our team today.

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