Hornsby resident, Kylie asks
“My partner and I are looking to get into the property market next year, and were wondering if we would be exempt from having to pay stamp duty? We’re first home buyers living in Hornsby NSW“
Great question Kylie, and one that’s certainly worth asking because stamp duty can get a bit confusing as it varies between states. Let’s look at some of the most frequently asked questions about stamp duty exemptions within NSW.
What is stamp duty?
Stamp duty is a state government duty payable upon purchase of a property. Stamp duty is payable on almost all home purchases.
There are however certain circumstances that may allow an individual to be exempt or to receive considerable discounts. This is where stamp duty exemptions comes into play.
The NSW Government offers the “First Home Buyers Assistance scheme”, which is a stamp duty exemption scheme, or stamp duty concession scheme.
Stamp duty concessions for existing homes
For example, from 1 July 2023 eligible first home buyers, when purchasing an established property (existing home) up to the value of $800,000 will receive a stamp duty exemption. From there, it moves to what’s referred to as a “sliding scale concession”.
As you move above $800,000 to $1,000,000 the percentage of the discount that you might be entitled to reduces. Again this applies only to existing homes, or houses that have already been built.
Stamp duty concessions for vacant land
In terms of buying vacant land, there are some differences.
Firstly, if you’re an eligible first home buyer, and you’re buying vacant land to build a property on which you intend to occupy, then there’s a full exemption from stamp duty up to a land purchase price of $350,000. Between $350,000 and $450,000 there is a sliding scale concession. Anything above $450,000 you pay the full stamp duty.
Eligibility requirements for NSW First Home Buyer Stamp Duty Concessions
To be an eligible first home buyer there are a few criteria.
Some of these criteria are as follows –
- An eligible purchaser must be an individual who has never owned or co-owned residential property in Australia
- The buyer must be at least 18 years of age
- They must not be in a relationship where their spouse or de-facto owns or has owned a residential property within Australia
- At least one eligible purchaser must be an Australian citizen or permanent resident
- The buyer must occupy the home as their principle place of residence for a continuous period of 12 months, and must move in within 12 months of the date of completion of construction, or the date of settlement.
How stamp duty is calculated
Use the calculator below to calculate your estimated stamp duty fees
Frequently asked questions about stamp duty
Who actually pays the stamp duty?
The purchaser of the either the land or the home pays the stamp duty. Payment goes to the Office of State Revenue of New South Wales.
When is stamp duty paid?
There’s often some confusion about this, but stamp duty is typically paid the earlier of 3 months after the date of signed contract, or the date of settlement. When purchasing an established property with a 6 week settlement period payment must be made at settlement.
It is possible to defer stamp duty payment when purchasing “off the plan”. It’s known as an “off the plan transfer duty liability deferral”. It allows you to defer stamp duty for 12 months, but only if your intention is to occupy the property as your principle place of residence. It cannot be used for investors anymore as of the first of July 2017. Investors can’t defer stamp duty on an off the plan property purchase.
Who else is exempt from paying stamp duty in NSW?
There are some other instances where stamp duty isn’t payable. For instance, in the event of a breakup of a marriage, and the property is transferred from both parties to the other party or the party that’s remaining in the property for example, then there’s no duty payable, but also in the case of transfers between married couples and de-facto partners.
An exemption from duty may apply where a transfer of residential land is between a married couple or de-facto partner, and the property being transferred is either the family home, so it’s like a principle place of residence, not an investment property.
Or it’s vacant land which is intended to be used as a site for the family home.
I strongly suggest you seek the advice of a legal expert or contact the Revenue department of the NSW Government. See their website at https://www.revenue.nsw.gov.au.
General advice and tips regarding NSW stamp duty exemptions
Often buyers will end up with 2 contracts when purchasing a house and land package. They’ll have one for the land and another for construction of the home. A common misconception that we see, are buyers thinking that stamp duty is payable on the total cost – the land plus construction cost.
This is not the case. Stamp duty is only applicable to land purchase, not to the land plus construction cost.
What Stamp Duty Concessions are available in other states and territories in Australia?
Have more questions? Get in touch with us
At Mortgage World we have assisted many customers seek the finance they need in order to purchase their own homes, whilst providing our knowledge on the stamp duty concessions available to them. Feel free to contact us on 1300 66 12 11 or enquire online.