With the First Home Buyer Choice Act passing last November, but not accessible until 16 January 2023, we waited with much anticipation for the first opportunity to help clients take advantage of this new legislation. Last week, we had our first property settlement where our client opted for the first home-buyers land tax scheme.
Here is our experience with the new scheme.
Our client exchanged contracts in December on a house in Western Sydney for a sale price of $1,160,000.00. The property was sold by Kent Pilkington of Laing+Simmons Quakers Hill / Schofields.
Until now, only first home buyers who purchased property under $800,000.00 were entitled to benefits. Now, the new land tax option applies to properties up to $1.5m, which allowed our client to access the scheme.
Using the First Home Buyer Choice Calculator, our client either had the option to pay upfront transfer duty of $48,000.00 or an annual tax of $1,924.00 per year. See the calculation below:
To be eligible for this option, you need to:
- Be an individual (not a company or trust).
- Be over 18 years old.
- Be an Australian citizen or permanent resident (or at least one person you are buying with be an Australian citizen or permanent resident).
- Not have previously owned or co-owned residential property in Australia, nor received any first home buyer grants or duty concessions in the past.
- Be purchasing a property for $1.5m or less.
- Move into the property within 12 months of purchase and live in it continuously for at least 6 months.
- Exchange contracts after 11 November 2022.
The application process works much like the transfer duty exemption/concession with two forms required.
The first is the standard Purchaser Declaration Form.
The second is a new form – the First Home Buyer Choice application.
The evidentiary requirements (such as ID and medicare card) are the same as for the first homeowners transfer duty concession/exemption.
As with the previous scheme, you will need to complete your Electronic Duties Return through your search provider. Our search provider, Trisearch, has a new dropdown labelled “First Home Buyer” which allows you to process the new application.
If you have questions, please get in touch with our team of lawyers and conveyancers. We are always happy to help.
Once you have completed the form, transfer duty will load as $0.00, and you will then be able to process your EDR through PEXA and verify the details as per normal.
The option to pay an annual tax instead of stamp duty allowed our client to significantly reduce their upfront cost of purchasing property. In addition, conveyancers and lawyers will have no issues with the application process, which is straight-forward and much like processing a first home owner transfer duty concession.
Get in touch if you have any questions about the new scheme.