For most home buyers, stamp duty is usually the single largest upfront cost involved in buying a home outside of saving up the deposit.
So the NSW Government’s recent announcement it would be slashing stamp duty for more first home buyers who buy new properties comes as welcome news.
We take a look at what has changed, what it means if you’re a first home buyer and, most importantly, how it can help you get on the property ladder in Sydney’s Inner City for the first time.
How the government has changed stamp duty thresholds
The government’s move to slash stamp duty - otherwise known as transfer duty - was brought about to stimulate the state’s construction sector while helping first home buyers onto the property ladder.
Before the government’s announcement, first home buyers were already exempt from paying stamp duty on property valued up to $650,000. A concessional rate then applied to properties valued between $650,000 and $800,000.
However, from 1 August 2020, those thresholds have changed for first home buyers who purchase new or off-the-plan properties. So long as they’re buying as owner/occupiers and not investors, first home buyers who buy these homes now pay stamp duty at the following rates:
- For properties under $800,000. No stamp duty is payable.
- Between $800,000 and $1 million. A concessional rate applies.
- Over $1 million. The full rate of stamp duty applies.
The government says that it expects these thresholds to apply to new homes for 12 months, until August 2021. First home buyers who purchase established homes will still receive stamp duty concessions at the previous rates.
How much could you save?
The changes could potentially save you up to $31,335 on a property valued at $800,000. Even on a property valued at $900,000, you’ll still save $15,668 in stamp duty.
This is great news for first home buyers in our area, where real estate prices mean that even an entry-level property often failed to qualify for any stamp duty concessions under the old thresholds. It should also open up many great new developments to first home buyers.
You can still qualify for other first homeowner entitlements
Qualifying for stamp duty exemption or concession won’t affect your access to other first homeowner entitlements.
For instance, the First Home Owner grant provides a one-off payment of $10,000 for new properties under $600,000.
The First Home Loan Deposit Scheme also guarantees part of your home loan so that you can borrow up to 95% of the property’s value without taking out lender’s mortgage insurance (LMI).
There is also the new Homebuilder scheme which runs until the end of 2020.
First homeowners in inner-city Sydney
Our area has always been popular with first home buyers. After all, it offers convenience, cosmopolitan living, great infrastructure and tremendous lifestyle appeal. It also offers many new and off-the-plan properties that are eligible for the stamp duty boosts.
And these stamp duty changes and other government benefits, as well as low interest rates, make it easier to get into the market than it has been for some time.
Here are just some of our recent sales where we’ve had a high level of first home buyer interest.
1/252 Abercrombie Street, Redfern
This generously proportioned two-bedroom, one-bathroom apartment offers open plan living just a short stroll from Redfern station. It sold for $805,000.
10/32 Queen Street Beaconsfield
This two-bedroom, one-bathroom split-level townhouse with parking is peaceful and quiet, walkable to Green Square, and has two outdoor areas. It sold for $971,000.
436 Botany Road Beaconsfield
This stylish single-storey terrace was revamped by Interior Designer, Aleisha Lancaster, and has one-bedroom, one-bathroom, and off street parking for one car. It sold for $965,000.
If you’d like to know more about getting onto the property ladder in inner-city Sydney, get in touch.