New South Wales Budgetary Measures 2022-23: more help is on the way for first home buyers as NSW government sets its sights on foreign investors
The NSW government handed down its 2022-23 Budget today, which has significant implications for first home buyers and foreign investors.
Assistance for First Home Buyers
Instead of the much talked about replacement of stamp duty with a broad-based land tax, the NSW government has announced a land tax option for first home buyers only who are buying a home valued at up to $1.5 million. First home buyers will be given the choice to opt in to pay the land tax or choose to pay stamp duty up front. The initial rate of land tax, in 2022-23, will be $400 plus 0.3% of the property’s unimproved land value, with this rate to be indexed to the Gross State Product per capita rather than land value. This is to ensure that the tax rate is reflective of average incomes and remains affordable.
Importantly, the opted in property will not be locked into the land tax net forever, as was originally proposed. That means a future buyer of that property who is not a first home buyer will pay stamp duty upon acquiring the land and will not have the option to buy under the optional land tax regime. The legislation making these amendments will be introduced later in the year, with first home buyers having the ability to take advantage of the alternative tax from 16 January 2023. Where contracts are exchanged between the enactment of this legislation and 15 January 2023, eligible first home buyers may receive a refund of transfer duty paid.
The NSW State Revenue Legislation Amendment Bill 2022 was also introduced into Parliament today. Once passed, in the case of all NSW residential land owned by the foreign person commencing at midnight on 31 December 2022, the rate of land tax surcharge will increase from 2% to 4%. This will have an impact on foreign investors who usually invest in residential projects, primarily in a bid to ease competition faced by local investors over time as seen in the projected fall in revenues from foreign investor surcharge land tax rates from $74 million 2022-23 to $57 million in 2025-26.
Get in touch
Senior Associate • Sydney
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.