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First Home Buyer Choice offered first home buyers the choice of paying an annual property tax instead of transfer duty. It was available from 16 January 2023 until 30 June 2023, when the scheme closed.
Retrospective applications for a refund of transfer duty were accepted from eligible first homebuyers who purchased a property between 11 November 2022 and 15 January 2023. Retrospective refunds also closed on 30 June 2023.
Note: The equity partner is liable to pay a proportion of the usual transfer duty, under theDuties Act 1997, based on the percentage interest in the property they are acquiring.
Eligible purchaser / Included owner
The owner who has elected to opt in and pay an annual property tax.
Off the plan
An agreement for the sale or transfer of dutiable property, being land on which a residence is to be erected or developed before completion of the sale or transfer and satisfies section 49A of the Duties Act 1997.
Principal place of residence
The one place of residence of a person, whether within or outside Australia, that is the primary residence of that person.
Spouse
The person to whom the applicant is legally married or living with as a couple in a de facto relationship as defined in theInterpretation Act 1987.
Transaction
An agreement for sale or transfer of land. Where there is no agreement, a transfer of land.
Purchasers of properties who opted-in to property tax under First Home Buyer Choice must have signed an agreement for sale or transfer of land, or an off the plan purchase contract (see below for details) on or before 30 June 2023.
To be eligible, purchasers (and/or their spouse) must have never previously owned/co-owned a residential property in Australia or received a First Home Buyer Grant or duty concessions.
They also must have been:
an individual (not a company or trust)
over 18 years old
an Australian citizen or permanent resident (or buying with someone who was)
What properties were eligible?
A new or existing home in NSW with a value not exceeding $1,500,000, or
Vacant land in NSW, on which to build, with a value not exceeding $800,000.
Primary production land, holiday homes and land used for business or a business premises were not eligible.
Residence requirements
Residence requirement for new or existing homes
The home must still be occupied by at least one of the eligible purchasers as their principal place of residence for a continuous period of at least 6 months, with that occupation starting within 12 months after settlement.
The residence requirement does not apply where at least one eligible purchaser is a member of the Permanent Forces of the Australian Defence Force and all eligible purchasers were enrolled on the NSW electoral roll as at the date of the transaction.
Residence requirement for vacant land
Once vacant land is opted into property tax, the owner-occupied rate for property tax purposes applies for a period of up to 5 years provided the following residence requirements are met:
Building work commences, or significant steps have been taken to allow the works to physically commence on the land within 2 years
No income is derived from the land, and
No other land owned by the included owner will be used as a principal place of residence by the owner or a member of the owner’s family.
Within the year proceeding the completion of construction the land must be occupied by the eligible purchaser/s as their principal place of residence for a continuous period of at least 6 months.
If the above vacant land residence requirements are not met, property tax will be chargeable for the period of ownership at the not owner-occupied rate.
In reasonable circumstances where the construction on the property has not been completed, an application to the Chief Commissioner can be made to extend the 5 year period.
Change of mind
Once you have made your choice to opt into property tax; you cannot change your mind once you are the owner of this land. However, you have until you complete your purchase to change your mind and seek a re-assessment to pay the transfer duty.
Buying with others who aren’t eligible
If you were eligible for First Home Buyer Choice and your percentage of the property is 50% or greater you could apply to purchase with a non-eligible person (referred to as an equity partner). However, that person would be liable for their share of transfer duty and the portion they own may contribute to their land tax liability.
The equity partner could not be your spouse.
You were classed as an included owner and your equity partner was classed as a not-included owner. The property tax notices of assessment are issued to included owners only.
and supply evidentiary requirements to your conveyancer or solicitor who will lodge your application with Revenue NSW as part of the conveyancing process.
Retrospective opt in (now closed)
A transitional period was provided so that eligible purchasers who paid transfer duty and completed the acquisition of their property, could apply to retrospectively opt into property tax.
To be eligible to retrospectively opt into property tax, the following criteria had to be satisfied:
At the time the application was made, you meet all eligibility criteria to opt into property tax, and
At the time the application was made, the eligible purchasers are still the owners of the home or vacant land, and
Your application to retrospectively opt into property tax had to be submitted to Revenue NSW by 30 June 2023.
The transaction provided had to be:
An agreement for sale or transfer of land entered into between 11 November 2022 and 15 January 2023, or
An off the plan purchase contract entered into between 11 November 2021 and 15 January 2022 which did not settle before 11 November 2022, or
An off the plan purchase contract entered into on or after 16 January 2022 and settled between 11 November 2022 and 15 January 2023 (inclusive).
Evidence required during the (now closed) application process included:
Completed ODA 076i Purchaser/transferee declarations for each purchaser/transferee (original forms that were submitted with your assessment)
Duties Notice of Assessment
Evidence settlement has occurred (settlement statement, title search)
If the purchaser/transferee is acting as trustee, details of the trust and all supporting documentation including any relevant stamped or endorsed declaration of trust
Proof of identity documents lodged with the application must be certified copies. A certified copy is a true copy of an original document that has been sighted and certified by an acceptable person and noted as follows:
"I certify that I have sighted the original document, and this is a true copy of it."
The certification must have the certifier’s name, title, registration number (where applicable) and be signed and dated.
Who can certify?
Acceptable people who may certify proof of identity documents are:
Legal practitioner
Licensed conveyancer
Justice of the Peace (JP)
Certified practising accountant
Chartered Accountant
Magistrate
Officers of Revenue NSW
Public notary
Commissioner for Declarations
Member of Parliament
Police officer
Pharmacist
Minister of religion
Medical practitioner
Dentist
Veterinary practitioner
Note: Documents can be certified outside Australia by a Public Notary or Justice of the Peace.
Off the plan properties
Off the plan purchase contracts first signed on or after 11 November 2021
Eligibility to opt into property tax is determined by the date the liability for transfer duty arises.
For off the plan purchase contracts that satisfy the criteria of section 49A of the Duties Act 1997, liability for transfer duty arises at the earlier of:
12 months after the contract is signed, or
when settlement occurs.
Off the plan purchase contracts signed on or after 11 November 2022
If settlement occurred between 11 November 2022 and 15 January 2023, eligible first home buyers will need to pay transfer duty, and then apply for a retrospective refund between 16 January 2023 and 30 June 2023.
If settlement occurs on or after 16 January 2023 and the eligible first home buyers have chosen property tax, transfer duty does not need to be paid. If settlement occurred before 11 November 2022, the first home buyers are not eligible to opt into property tax.
Off the plan eligibility criteria
The off the plan purchase contract is for the purchase of a residence that is to be erected or developed before the contract or transfer is completed/settled.
*The combined value of both the land and new residence must not exceed $1,500,000.
A contract for the sale of vacant land is not eligible for the off the plan extended duty liability date.
As at the date of the contract, no purchaser is a foreign person and liable to Surcharge Purchaser Duty under Chapter 2A of the Duties Act 1997.
The residence will be used and occupied by at least one of the eligible first home buyers as their principal place of residence. The residence must be their principal place of residence for a continuous period of 6 months commencing within 12 months from the date of completion of the transaction. This does not apply if one of the eligible purchasers is a member of the permanent forces of the Australian Defence Force and all eligible purchasers are enrolled on the NSW electoral roll at the date of the transaction.
How is property tax calculated?
The annual property tax payments will be based on the land value of the purchased property, notices are issued each financial year. More information can be found at Property Tax.
The property tax rates for 2022-23 & 2023-24 will be:
Land use category
Fixed component
Variable component
Residential land that is owner-occupied
$400
+
0.3% of land value
Residential land that is not owner-occupied
$1,500
+
1.1% of land value
Both the fixed and variable component will be indexed each year as of July 2024, so that the average property tax payment rises in line with average incomes.
Property tax assessments will be issued in respect of financial years. For properties that are owned for less than a full financial year, a pro-rata adjustment will be made based on the number of days in the year the property is owned.
Land tax implications
There may be instances where a property opted into property tax may also be subject to land tax.
Opted-in property (wholly):
Property that is opted into property tax that is the owner’s principal place of residence is exempt from land tax. In the event the property is not owner occupied, a reduction will be applied to any land tax liability for that property.
Scenario:
Julie is an eligible first home buyer who purchases a property and opts into property tax.
Whilst living in the property Julie is not liable to pay land tax.
After 2 years Julie needs to relocate for work, but retains her property and rents it out.
The class of land usage has now changed to not-owner occupied.
As the property is opted into property tax, any land tax that would have been levied would have a reduction applied.
As a result of the property tax reduction on Julie’s land tax assessment notice, there would be no land tax payable. Julie would receive a property tax assessment only.
Partially opted-in property (land purchased with equity partners):
Properties that are purchased with equity partners may be subject to land tax for only the portion of the property that is not opted into property tax (the equity partner’s share of the property).
Note: All property owners are jointly and severally liable to pay any land tax that is levied.
Scenario:
James is an eligible first home buyer and has purchased a property with his mother Jessie who is an equity partner.
James and Jessie each have 50% ownership of the property. James has opted into property tax for his share of the property.
Jessie cannot opt in as she is not a first home buyer.
James lives in the property and therefore there is no land tax payable by James or Jessie, as a Principal Place of Residence exemption is applied for land tax purposes.
After 1 year of living in the property, James moves out and neither he nor Jessie are living in the property, and it is rented out.
After consideration is given to any exemptions, concessions or thresholds that may apply, if there is any land tax payable, a reduction will apply for Jame's 50% portion of the property that is subject to property tax.
Foreign owner surcharge
If you are deemed a foreign owner of residential land in NSW (for land tax purposes), you may be required to pay surcharge tax in addition to any property tax payable. You may be required to pay the surcharge even if you do not pay land tax.
You’re generally considered a foreign person for land tax purposes, unless:
you’re an Australian citizen; or
you’ve lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December, and you’re a permanent resident of Australia.
For further information relating to surcharge land tax please visit Foreign Owner Surcharge. You may also wish to review the surcharge land tax assist tool to determine if land tax surcharge applies to you.
Scenario:
Karen is a citizen of South Korea however is a permanent resident of Australia.
Karen is an eligible first home buyer who purchases a property and opts into property tax as she intends to reside in the property.
Karen received a Surcharge Purchaser Duty exemption as she had resided in Australia for more than 200 days preceding the purchase. She lived in the property for a continuous period of 6 months within the first 12 months of ownership.
Karen relocates overseas for work and does not reside in Australia for more than 200 days of the next calendar year.
Karen is obligated to advise Revenue NSW of the change in her circumstances by 31 January of the next year. Karen must lodge a land tax return via land tax online.
Karen will be liable for foreign owner surcharge based on the land value of the property and will receive a foreign surcharge land tax notice of assessment.
Examples
These examples are relevant to 2022-23 and 2023-24:
Jessica and Matthew are buying their first property, a house with a purchase price of $650,000 in Mudgee. The property has a land value of $340,000.
Ordinarily, transfer duty on a $650,000 home would be $24,340, but because Jessica and Matthew are first home buyers, they are exempt from transfer duty and therefore do not choose the property tax. See First Home Buyer Assistance Scheme for more information on concessional rates of transfer duty.
Ranit is buying his first property, a townhouse purchased for $1.2 million in Newcastle. The land value of this property is $720,000.
Transfer duty on this purchase is $50,200, and the purchase price is above the threshold for any first home buyer transfer duty concessions.
In 2022-23, property tax on the property would be $2,560.00.
Ranit is not sure how long he will own the property, but he has heard that half of all owner-occupiers sell their property within about ten years.
Not having to pay transfer duty would really help to lower the up-front costs of the purchase, so Ranit chooses the property tax.
Making false claims
There are substantial penalties for providing false or misleading information when applying for the First Home Buyer Choice. We regularly check applications for inaccuracies and compare your information to data from other government agencies and businesses.
Objections and reviews
You can lodge an objection if you’re dissatisfied with an assessment or decision we’ve made. You must lodge the objection within 60 days of the issue date of an assessment or decision.
The objections form is available and can be accessed below.
