The ‘First Home Buyer Choice’ scheme has recently been announced and is effective immediately. The scheme now offers first-home buyers a choice of paying upfront stamp duty on their purchase or paying an annual property tax – however, there are some eligibility and terms to consider.
The first thing to note is that while the scheme is effective from now, there is a transitional period until 16 January 2023. Until this time first home buyers will still have to pay stamp duty, however, they can apply for a refund from 16 January, and switch to the annual property tax instead.
The eligibility for the new scheme is similar to the existing schemes for first-home buyers with the one major difference being the purchase price ceiling, with purchases up to $1.5 million dollars eligible.
If you choose to pay the annual property tax, this will be $400 plus 0.3% of the land value of your property and will be payable each year that you own and live in the property.
There is a calculator online to help you estimate the annual tax. The property tax rates will be annually indexed from 2024-25 to ensure property tax remains an affordable option, and these are capped at 4%.
What’s important to note is that the property tax will be in effect annually as long as you own the property and is no longer payable if you sell. Many first-home buyers do sell and upgrade to another property within 5-10 years of buying their first home, so this scheme may see you saving money in the long run.