First-home buyer stamp duty exemption lifted from $650,000 to $800,000 from July 1

Buyers in one state will be able to save tens of thousands of dollars on their first homes in new laws that will come into effect in just weeks.

From July 1, first-home buyers in NSW will be able to ditch stamp duty on property purchases under $800,000, with the stamp duty exemptions being lifted from their current cap of $650,000.

The legislation officially passed both the upper and lower house on Thursday night, with NSW Treasury expecting about 8600 first-home buyers to receive a full exemption and 4400 people to qualify for a partial exemption.

A sliding scale of concessions will also be available on properties between $800,001 to $1m. Under the incoming rates, an $850,000 property will incur a stamp duty tax of $10,023 instead of $33,340 – saving buyers $23,318.

However, concessions are reduced on properties closer to the $1m cap. Homeowners will save just $1555 under new concessions on a home purchased for $990,000, with stamp duty reduced from $39,640 to $38,086.

From July 1, the first-home buyers stamp duty exemption cap will be lifted from $650,000 to $800,000. Picture NCA NewsWire/ Seb Haggett

The increased stamp duty exemptions will replace the Coalition government’s First Home Buyer Choice scheme, which allowed homeowners to choose between an annual property tax or upfront stamp duty on homes up to $1.5m.

Although the scheme will end on June 30, people who bought their first home under the policy will not be affected by the change.

Real estate bodies including the Real Estate Buyers Agents Association and CPA Australia bemoaned the scrapping of the Australia-first policy.

“The NSW government is taking a step backwards by stopping first-home buyers from opting out of stamp duty,” CPA Australia senior tax policy manager Elinor Kasapidis said.

“It’s pleasing to see the stamp duty thresholds increased in NSW, but it’s not enough in the long run.”

Prior to the legislation passing both houses on Thursday, Opposition Leader Mark Speakman said scrapping the Coalition’s policy was a “kick in the guts for first-home buyers”.

“We have median house prices in Sydney that are well over $1m, about $1.2m. Those people will be paying something like $50,000 stamp duty,” he said.

“Speak to any public commentator, any economist and they will tell you that stamp duty is among the most egregious taxes we have. We should be doing everything we can to reduce reliance on that tax.”

NSW Premier Chris Minns said the government’s first-home buyers’ benefit was fairer. Picture: NCA NewsWire/ Gaye Gerard

However, Premier Chris Minns said he believed Labor’s policies would help more buyers struggling to get on the housing ladder.

“We promised to deliver a fairer and simpler way to help more first-home buyers and that will become a reality from 1 July,” he said.

“Our changes will help more first-home buyers to take a step onto the property ladder.”

NSW Treasurer Daniel Mookhey said five out of six first-home buyers would benefit.

“Our simpler, fairer system will help first-home buyers, allowing them to enter the market sooner and giving them a boost when competing with other buyers,” he said.