As of recently, there have been important legal changes in relation to property for First Home Buyers. New South Wales legislation has introduced significant changes to the First Home Buyers Assistance Scheme (FHBAS) effective from 1 July 2023.
Let’s unpack these changes and what they may mean for you.
The Start of FHBAS and The End of FHBC
The first major shift is the replacement of the First Home Buyers Choice (FHBC) with the First Home Buyers Assistance Scheme (FHBAS). This means that from 1 July 2023, new purchasers will no longer have the option to choose between property tax and transfer duty on new purchases.
If you’ve exchanged contracts on or before 30 June 2023, you’ll still have up until settlement to opt-in to FHBC. Also, those who have opted into FHBC will continue to pay property tax for as long as they own their property and will remain exempt from transfer duty on that purchase. These are the so-called “grandfathering” provisions included in the new legislation.
A Much-Needed Stamp Duty Break
Exciting news for first-home buyers is the lift in stamp duty exemptions from $650,000 to $800,000. This means if you purchase a home valued under $800,000, you will not have to pay stamp duty. Further, if you buy a home valued between $800,000 and $1 million, you can apply for stamp duty concessions.
But be aware, if you purchase a home for $1 million or more on or after 1 July 2023, you will be ineligible for these exemptions or concessions and will be required to pay the full transfer duty.
The Change in Residential Requirements
From 1 July 2023, the residential requirements to live in the home will increase from a continuous 6-month period to a continuous 12-month period. This applies to the following schemes, grants, and exemptions:
- First Home Buyers Assistance scheme
- First Home Owner grant
- Deferral of transfer duty payment for off the plan transactions
- Exemptions for tenants of the Department of Housing and Aboriginal Housing Office
Shared Equity and FHBAS
It’s worth noting that even if you’re buying a home with others who aren’t eligible for FHBAS, you can still apply for the scheme if you and any other eligible buyers are purchasing at least half of the property. This is known as a shared equity arrangement. However, this arrangement does not apply if your spouse is one of the ineligible buyers.
Updated FHBAS Thresholds
The below tables break down the FHBAS thresholds. The threshold applicable to your transaction is determined by the date on which you exchanged contracts to purchase the property.
From 1 July 2023
| New homes | Existing homes | Vacant land |
| – Buy a new home valued at less than $800,000, apply for a full exemption, and pay no transfer duty. – Buy a new home valued between $800,000 and $1,000,000, and apply for a concessional transfer duty rate. The amount will be based on the value of your home. | – Buy an existing home valued at less than $800,000, apply for a full exemption and pay no transfer duty. – Buy an existing home valued between $800,000 and $1,000,000, apply for a concessional transfer duty rate. The amount will be based on the value of your home. | – You won’t pay transfer duty if your land is valued at less than $350,000. – For land valued between $350,000 and $450,000, you’ll receive a concessional rate. |
1 July 2017 – 31 July 2020 and continuing from 1 August 2021 – 30 June 2023
| New homes | Existing homes | Vacant land |
| – Buy a new home valued at less than $650,000, apply for a full exemption, and pay no transfer duty. – Buy a new home valued between $650,000 and $800,000, and apply for a concessional transfer duty rate. The amount will be based on the value of your home. | – Buy an existing home valued at less than $650,000, apply for a full exemption and pay no transfer duty. – Buy an existing home valued between $650,000 and $800,000, apply for a concessional transfer duty rate. The amount will be based on the value of your home. | – You won’t pay transfer duty if your land is valued at less than $350,000. – For land valued between $350,000 and $450,000, you’ll receive a concessional rate. |
1 August 2020 – 31 July 2021
| New homes | Existing homes | Vacant land |
| – Buy a new home valued at less than $800,000, apply for a full exemption, and pay no transfer duty. – Buy a new home valued between $800,000 and $1 million, and apply for a concessional transfer duty rate. The amount will be based on the value of your home. | – Buy an existing home valued at less than $650,000, apply for a full exemption and pay no transfer duty. – Buy an existing home valued between $650,000 and $800,000, and apply for a concessional transfer duty rate. The amount will be based on the value of your home. | – You won’t pay transfer duty if your land is valued at less than $400,000. – For land valued between $400,000 and $500,000, you’ll receive a concessional rate. |
Contact Us
It’s important to understand the nuances of the new rules and how they might impact your home-buying journey. We recommend consulting with our team to ensure you’re well-informed and prepared for these changes.
We’re here to help you navigate the complex world of property law and to make your first home-buying experience as smooth as possible. Phone us at (02) 9774 3175 if you need professional advice tailored to your specific circumstances.