The NSW Government has just announced a new stamp duty incentive in a bid to create jobs by boosting the construction industry amid the pandemic. What does this mean for you though? Are you entitled to the incentive? What must you do to qualify and exactly how does it work? Read this blog to find out all the key details about the new scheme.
Who is eligible?
To access the stamp duty savings, you must meet the following criteria
How does it work?
The government is rolling out this scheme by increasing the stamp duty free thresholds. This will result in eligible first home buyers saving thousands in stamp duty depending on the purchase price of the property. The stamp duty free threshold will increase from the current $650,000 for any property to $800,000 on new homes only. This means that you could purchase a $800,000 home while paying no stamp duty which would save $31,490 compared with the current stamp duty incentives for first home buyers. If you purchase a new home above $800,000, you will need to pay stamp duty however the rate will be reduced up to a purchase price of $1,000,000. For properties over the million dollar mark, you will need to pay the normal rate of stamp duty. The stamp duty free threshold on vacant land will rise from $350,000 to $400,000 before going back to the normal rate above $500,000. The scheme will come into effect on the 1st August 2020 and is currently only confirmed for 12 months.
How to best utilise these schemes as a first home buyer
Not only has the Government just rolled out this new incentive, there is the first home buyer deposit scheme and first homeowner grant which makes this a great time for first home buyers to get into the market. Let’s have a look at an example of how a first home buyer could maximise these schemes. We’ll use an example of a first home buyer building a new home in the Blue Mountains on a vacant block of land for a total cost of $700,000.
20% Deposit – No incentives
10% Deposit – No incentives
5% Deposit – No incentives
5% Deposit – New stamp duty scheme, deposit scheme and first home buyer grant
When you look at the numbers, it is obvious that the new schemes make a dramatic different to a first home buyer. Previously the minimum capital needed was $90,224 which would have essentially wasted $55,224 in stamp duty and lenders mortgage insurance. With the schemes, only $25,000 is needed and there is no lost money. You are actually profiting $10,000 in equity by getting the first home buyer grant.
We hope you have found this information useful, if you need any help or advice shoot us an email at email@example.com and we’ll be happy to help further.