I have some exciting news for First Home Buyers!
Stamp duty can be a major hurdle for First Home Buyers, but they will soon have the choice to pay a property tax instead.
Currently, there are concessions for stamp duty for First Home Buyers, where they are exempt up to $650k, and discounted from $650k to $799k. The discount is tiered, so the closer you get to $799k, the less discount you get, until your reach $800k, where no discount applies.
The problem is though, the median house price on the Central Coast is $800k, so for a First Home Buyer to purchase an average home, full stamp duty will apply.
Stamp duty on an $800k property would normally be $31,090. However, with the "First Home Buyer Choice" scheme, First Home Buyers could instead pay an annual property tax of say $2,080.
So should a First Home Buyer pay the annual property tax? Or pay the stamp duty upfront?
Well... this would come down to a few factors...
How long do they see themselves in this property? Is this property a stepping stone to a bigger house? Or is this a long-term home? Paying the annual property tax of $2,080 equals about 15 years before you will have paid as much as stamp duty upfront. So if they only plan on being there for 5 years, then it may well be worth paying the annual property tax.
Another factor is how much deposit they have. If they have a deposit of $50k for instance, the stamp duty for this $800k property will reduce the deposit to $18,910, which would be well short of what is required.
WHen is this happening?
The "First Home Buyer Choice" scheme is due to pass legislation by the end of the year, and is expected to kick off January/February next year.
Should a First Home buyer Wait?
Possibly... It would depend on the individual circumstance. Their best option would be to seek a broker now (preferably me 🤣) and seek advice on whether it would be better to wait, or act now.
There have truly never been so many schemes and incentives for First Home Buyers to purchase, and these schemes won't be around forever. Below are all of the available schemes at the moment...
First Home Buyer Choice (property tax in lieu of stamp duty - coming soon)
First Home Buyers Assistance Scheme (stamp duty exemption or discount up to $799k)
First Home Guarantee Scheme (purchase property with only a 5% deposit and no Mortgage Insurance)
Family Home Guarantee (single parents can purchase a property with only a 2% deposit and no Mortgage Insurance - not only for First Home Buyers)
First Home Owner Grant ($10k grant for newly built properties)
As usual, there are loads of terms and conditions and eligibility requirements that need to be considered.
If you're a First Home Buyer, or you know one, I'd be happy to review your scenario and we can make a plan together.