On Monday 16 January 2023 the First Home Buyers Choice Scheme (“Scheme”) commenced. You must apply to opt-in, otherwise transfer duty (previously called stamp duty) will be assessed.
Who is eligible to opt-in for the Scheme?
To be eligible to apply to opt-in, you must:
- Be an individual over the age of 18 (you cannot purchase in a company name; some trusts may be eligible for a waiver of this requirement if certain requirements are met but generally will be ineligible);
- Be a first home buyer (you and your spouse have never owned any residential land in Australia or received any grant or concessions in the past);
- Be an Australian citizen or permanent resident;
- Sign the contract for purchase on or after 16 January 2023;
- Purchase an eligible residential property; and
- Meet the minimum residence requirement following settlement.
All eligible purchasers must opt-in to the Scheme.
Which properties are eligible for the Scheme?
To be eligible to apply for the Scheme, the property must:
- Be a new or existing home with a value up to $1,500,000.00; or
- Vacant land in NSW on which you will build your first home with a value up to $800,000.00.
Holiday homes, primary production land (farmland) and land used for business or land where a business premises is located are ineligible for the Scheme.
What is the minimum residence requirement?
Where the property is a new or existing home, you must occupy the home for a period of six consecutive months starting within the first 12 months following settlement.
Where the property is vacant land in which you intend to build, you must occupy the home for a period of six consecutive months starting within the first 12 months following completion of the building work. The building work must commence within 2 years of settlement. Construction should be completed within five years; however, you may apply for an extension if construction is delayed. No income may be derived from the land.
Exemptions apply to members of the Australian Defence Force.
What happens if I later sell the property and purchase another home?
The property is only eligible for the Scheme whilst you continue to be the owner. If you sell the property, your purchaser will either need to pay transfer duty or opt-into the Scheme if they are eligible.
If you sell the property prior to meeting the minimum residency requirements, your eligibility for the Scheme may be reassessed.
As you will no longer be a first home buyer, you will not be eligible to op-in to the Scheme for the purchase of next home.
What does this mean if I already purchased a home and paid transfer duty?
Eligible first home buyers who entered a contract to purchase a home between Friday 11 November 2022 and Sunday 15 January 2023 and have paid transfer duty can apply to retrospectively opt-into the Scheme. If your application is accepted, the transfer duty paid will be refunded and an assessment for annual property tax issued.
Applications to retrospectively opt-in to the Scheme must be submitted by 30 June 2023.
What about the other first home buyer schemes?
These continue to be available. Eligibility criteria varies and you may be eligible for more than one scheme. If this is the case, you will need to consider which scheme is best for you. For example, if you are eligible for a full exemption from transfer duty on the First Home Buyer Assistance Scheme, you may be better off applying for the exemption rather than the annual property tax under the Scheme.
If I opt-in, can I change my mind later?
You may withdraw your application to opt-in prior to settlement. If you withdraw your application, transfer duty will be assessed in full unless you are eligible and apply for another scheme. After settlement, you cannot change your mind and opt-out.
Where can I find more information?
More information on the Scheme and other first home buyer or new home schemes can be found on the Revenue NSW website:
First Home Buyer Choice:
https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/first-home-buyer-choice
First Home Buyer Assistance:
https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme
All Schemes and Grants:
https://www.revenue.nsw.gov.au/grants-schemes
Online duty calculators:
https://www.revenue.nsw.gov.au/help-centre/calculators
By Ruth Tzouras
Disclaimer
This article provides general information only. It is not a comprehensive summary all aspects of the Scheme, eligibility and obligations of participants or its application to every circumstance. It is not a substitute for legal advice and should not be relied on as legal advice. We do not provide financial or accounting advice. We strongly recommend you obtain legal advice and financial/accounting advice before deciding whether to opt-in for the Scheme.