2023 Stamp Duty Law Updates NSW

Stamp Duty Law Change

Tuan Duong

2023 UPDATE: NSW Stamp Duty Rules Change Again

There’s no denying that buying a home is a big financial commitment. In addition to the property’s purchase price, associated costs like stamp duty can quickly add up. And for many first-time home buyers, stamp duty is a significant extra expense that often adds years to their savings efforts.

The New South Wales government, previously led by the Liberal party, initiated a process aimed at streamlining the system with the intention of expediting property ownership for residents.

In response to this initiative, the Labor Party proposed alternative strategies.

Not even a year after its inception, The First-Home Buyer Choice Scheme will no longer exist. Instead, the Labor Party has introduced higher exemption thresholds.

Given that there has been a lot of back and forth over the last few months, we wouldn’t blame you if you feel confused.

So, here’s what you need to know. 

What is Stamp Duty? 

Stamp duty is a tax levied on property transfers in Australia.

The buyer pays it to the Australian Taxation Office (ATO), and it’s calculated on the property’s purchase price. The amount of stamp duty you’ll need to pay will vary from state to state.

For example, in NSW, you’ll likely pay around $33,000 in stamp duty on an $850,000 property. The rates for particular value ranges look like this:

Property Value Stamp Duty Rate 
$0 to $15,000$1.25 for every $100 (minimum $10)
$15,000 to $32,000$187 plus $1.50 for every $100 over $15,000
$32,000 to $87,000$442 plus $1.75 for every $100 over $32,000
$87,000 to $327,000$1,405 plus $3.50 for every $100 over $87,000
$327,000 to $1,089,000$9,805 plus $4.50 for every $100 over $327,000
Over $1,089,000$44,095 plus $5.50 for every $100 over $1,089,000

And in Queensland, for the same property, you’ll likely pay around $25,000: 

Property Value Stamp Duty Rate 
$0 to $5,000$0
More than $5,000 up to $75,000$1.50 for each $100, or part of $100, over $5,000
$75,000 to $540,000$1,050 plus $3.50 for each $100, or part of $100, over $75,000
$540,000 to $1,000,000$17,325 plus $4.50 for each $100, or part of $100, over $540,000
More than $1,000,000$38,025 plus $5.75 for each $100, or part of $100, over $1,000,000

Each state and territory fully outlines their stamp duty rates on their revenue offices’ websites. Most also have an estimator calculator to get an idea of how much you’ll have to save to cover the stamp duty costs in addition to your deposit and other upfront fees. 

You can access the relevant website here: 

What Stamp Duty Changes Did the NSW Government Make For First Home Buyers?

In an effort to minimise the financial burden stamp duty places on new property buyers in NSW during 2022, the local government announced a choice between paying stamp duty upfront or in smaller annual property tax payments. This was known as the First-Home Buyer Choice Scheme.

The scheme, which came into effect on January 16 2023, essentially allowed eligible first-time home buyers to either pay an annual tax plus a percentage of the land’s value or a lump sum payment before the transfer takes place.

The annual rate was set at 0.3% of the property’s unimproved value of the land plus $400.

Note: The “unimproved value” of the land generally refers to the market value of vacant land that has not been developed or improved in any way.

So, on the $850,000 property we discussed earlier, you’d now be able to choose between either paying $33,000 upfront when you purchase the house or making annual payments of: 

[$290,000 (unimproved land value) x 0.3%] + $400  = $1,270. 

You’ll continue paying the fee as long as you use that home as your main residence. When you sell the property, you’ll no longer have to pay the annual stamp duty fee. 

However, the recent local government election saw Labor winning the requisite number of seats to form the new NSW Government – and they had other ideas for stamp duty.

So, What Does This Mean For First-Time Property Buyers in NSW?

If you are one of the 8,000 property owners who already opted in for the First Home Buyer Choice, you’ll continue to pay the annual property tax as previously arranged.

However, if you buy a property after the start of the new financial year (i.e. July 1, 2023), you’ll no longer have the option to opt in for the annual land tax scheme. Instead, you’ll be required to pay upfront stamp duty unless your property’s value falls below the exemption threshold.

Replacing Annual Land Tax With More Favourable Stamp Duty Exemption

As a first-time buyer, you may also be eligible for stamp duty exemptions, which will waive the fee altogether.

As of 1 July 2023, eligible buyers can apply for an exemption.

For example, based on the First Home Buyers Assistance Scheme in NSW, eligible buyers can apply for an exemption if they’re buying newly built homes up to a value of $800,000.

This was previously only set at $650,000. However, given the plans to abolish the First Home Buyer Choice Scheme, the Labor government chose to increase the exemption threshold.

There are also certain concessions that will reduce the amount of stamp duty you pay if your property is valued between $800,000 and $1 million.

If you are purchasing vacant land on which you intend to build a home, you may receive an exemption for land valued up to $350,000 and a concessional rate for land valued over $350,000 and less than $450,000.

On or after 1 July 2023

Property valueExemption
New and existing homes
Value is equal to or less than

You can apply for a full exemption from transfer duty.

Value is above

and less than
$1 Million

Concessional Rate
You can apply for a concessional transfer duty rate.
Vacant Land
Value is equal to or less than

You can apply for a full exemption from transfer duty.
Value is above

and less than

Concessional Rate
You can apply for a concessional transfer duty rate.

Key Takeaways 

  • The First-Home Buyer Choice Scheme in NSW, Australia, allowing first-time home buyers to pay stamp duty in smaller annual payments, has been abolished by the Labor government.
  • Instead, they’ve raised the exemption threshold for the First Home Buyers Assistance Scheme, offering stamp duty waivers for newly built homes valued up to $800,000.
  • These changes are anticipated to take effect from July 1, 2023.

If you have any questions relating to the new stamp duty regulations or if you would like to organise a stamp duty valuation from a Certified Practising Valuer, get in touch with the Duo Tax team today. 

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Disclaimer: Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your investing affairs.

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Tuan Duong

Tuan is an award winning Quantity Surveyor and leads Duo Tax Quantity Surveyors – Australia’s fastest growing provider of Tax Depreciation.

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