The New South Wales (NSW) Government recently announced that first-time home buyers will benefit from a temporary increase in stamp duty thresholds.
Under the changes, the threshold above which stamp duty will be charged on new homes for first home buyers will increase from the existing $650,000 to $800,000, phasing out gradually on homes with a value up to $1 million.
In addition, the threshold for stamp duty on vacant blocks of land will increase from $350,000 to $400,000, before terminating at $500,000. There are no changes to stamp duty on existing homes. The changes will extend for 12 months, beginning on 1 August 2020
Ms Berejiklian estimated that the initiative will benefit more than 6,000 first home buyers across the state.
According to Treasurer Dominic Perrottet, the changes mean that first home buyers will be able to save up to $31,335 in stamp duty on a home worth $800,000.
Announced by Premier Gladys Berejiklian on 27 July 2020, the initiative is part of the NSW Government’s COVID-19 Recovery Plan, which is designed to help ensure that the state remains resilient and build a future-proof economy. The initiative should help to bolster the residential construction industry and create jobs.
First Home Owner Grant & HomeBuilder Scheme Eligibility
The reduced stamp duty rate is accessible by people who opt to use the $10,000 First Home Owner Grant, as well as the HomeBuilder Scheme.
The introduction of the Federal Government’s HomeBuilder Scheme in June resulted in a 77.6% increase of new home sales in the month that it was introduced. This sharp spike is evidence that these schemes and initiatives are effective, and offers hope that the slashing of stamp duties will have a similar effect in providing the construction industry with a much-needed boost.
Other Initiatives to Support the Construction Industry
These recent changes to the NSW stamp duty come on the back of a variety of government initiatives designed to boost the building and construction industry during the COVID-19 pandemic.
Many of these government initiatives aim to help first-time home buyers purchase or construct a new home, including:
- HomeBuilder Scheme – Provides eligible owner occupiers with a $25,000 grant to build a new residence or undertake substantial renovations to a pre-existing home
- First Home Loan Deposit Scheme – Enables first time home buyers to purchase their first home with just a 5% deposit; the Government provides the bank with a guarantee of up to 15% of the property’s value
- First Home Owner Grant – Offers up to $20,000 to build or buy a new home, depending on your state or territory, location and the value of the property