With the upcoming state election looming there has been talk in the media around various changes to stamp duty and in particular stamp duty payable by first home buyers.

The current state government has recently introduced a choice to pay a property tax instead of stamp duty, which is exclusively available to first home buyers at the time the property is purchased with annual payments based on the land value not the purchase price.

The First Home Buyer Choice Scheme allows first home buyer the choice to either pay the existing upfront stamp duty or an annual property tax when they are purchasing either a new or existing home with a purchase price not exceeding $1,500,000.00, or vacant land on which a new home is intended to be built where the purchase price of the land does not exceed $800,000.00.

For example, if you purchased a home for $900,000.00 and the land value without the house is $400,000.00 then your annual property tax for the first year would be approximately $1,600.00. If you held this property for 5 years you would be expected to pay around $8,000.00 over the 5 years in land tax as opposed to the upfront stamp duty amount of $35,590.00. Purchasing a unit in a large complex with lower land value would mean the annual property tax would be even less.

The Property Tax liability will remain an annual charge on the land only for the period of time you own the property. Once the property is sold the land tax charge ceases to apply to the purchaser and the property and no further payments are required.

The annual property tax option may be the better choice for you if your intention is not to hold onto the property for an extended period of time.

The current First Home Buyer stamp duty exemptions remain unchanged on home purchases up to $650,000.00 and vacant land up to $350,000 and partial exemptions up to $800,000.00 on homes and $450,000.00 on vacant land.

To be eligible to opt in for the Annual Property Tax in lieu of the usual upfront Stamp Duty you must be an individual who at the time of exchange is at least 18 years of age and has not, or whose spouse has not at any time, owned either solely or with someone else residential land in Australia.

If you’re a First Home Buyer and would like further details or if you wish to discuss which option is best for you, please contact Lisa Devine our experience Licensed Conveyancer at Foye Legal.