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From 1 July 2023, First Home Buyer Choice (FHBC) will no longer be available. Eligible first home buyers who exchange contracts on or before 30 June 2023 will have until completion of the agreement to opt in to FHBC.


Retrospective applications to opt into property tax closed on 30 June 2023.


Those who have already opted into FHBC will not be impacted.


On 1 July, the First Home Buyers Assistance Scheme (FHBAS) will be expanded. See the FHBAS guide for details.

Transactions involving an equity partner

First Home Buyer Choice allows eligible purchasers/transferees (first home buyers) to acquire residential land and vacant land in NSW with equity partners (non-first home buyers) while still being able to opt into property tax.

Definition of an equity partner

A purchaser or transferee who is not an eligible purchaser/transferee and is not a participant in an approved shared equity scheme as described in Section 281 of the Duties Act 1997 is commonly referred to as an equity partner.

Conditions for transactions involving an equity partner

The following conditions apply to transactions which involve equity partners.

  • An equity partner cannot be a spouse of an eligible purchaser or eligible transferees.
  • The transaction must be an eligible transaction as prescribed in Part 3 of the Property Tax (First Home Buyer Choice) Act 2022.
  • An equity partner’s share or if more than one equity partner, their combined share in the ownership of the property cannot exceed 50%.
  • No purchaser forming part of the transaction can be a company, unless the Chief Commissioner is reasonably satisfied the transfer should be an eligible transfer despite the transferee being a company.

The specific percentage share of the property being acquired by an equity partner is used to calculate their liability for transfer duty. This differs from the First Home Buyer Assistance Scheme, where the transaction will be considered eligible for a full exemption or maximum concession of transfer duty if an equity partner’s share in the property does not exceed 5%.

Included owner

On the transfer of the land, each eligible purchaser/transferee (first home buyer) becomes an included owner and the proportion of the transferred land owned by included owners becomes subject to property tax.

Find more information about included owners in Chapter 12 - Property Tax.

Transfer duty calculation for transfers involving equity partners

Equity partners are liable to pay a proportion of the usual transfer duty, under the Duties Act 1997, based on the percentage interest in the property they are acquiring.

Accordingly, an equity partner must pay their transfer duty:

  • within 3 months after the liability to pay the duty arises or
  • upon settlement/transfer of land, whichever occurs earlier.

It should be noted that while property tax is calculated using the land value, transfer duty will be calculated using the dutiable value (the greater of the purchase price or value) of the dutiable property as per Section 21 of the Duties Act 1997.

As the equity partner is not eligible to opt into property tax, they will not receive an annual property tax notice of assessment.

Property tax calculation for transfers involving equity partners

Eligible purchasers/transferees who opt into property tax will not be liable to pay transfer duty. Instead, they will be liable to pay an annual property tax on the proportion of the land they are acquiring. The annual property tax will be calculated using the land value.

Refer to Chapter 12 - Property tax of this guide for more information about property tax rates.

How to process or submit applications involving equity partners

Electronic Duties Returns (EDR)

After the date of commencement 16 January 2023 , transactions involving equity partners can be processed in EDR by using document type “Agreement for sale of land – First home buyer” or “First home buyer - off the plan purchasers”.

The equity partners transfer duty liability will automatically be calculated based on the details entered.

The Duties Notice of Assessment will show the parties opting into property tax and the parties that are liable for transfer duty.

eDuties

As per the Duties Document Matrix (PDF, 506.95 KB), any assessment that cannot be assessed in EDR must be submitted in eDuties using application type “First Home Buyer Choice - Assessment Application”.

To avoid delays, ensure all relevant evidentiary requirements, proof of identity documents and forms are submitted in eDuties at the time of application.

 

First Home Buyers Choice does not change the eConveyancing process.


A Duties Assessment Number (DAN) will be provided on the Duties Notice of Assessment.


Duties verification and settlement is then conducted via the Electronic Lodgement Network Operator (ELNO).

Helpful information

Equity partners who are foreign persons

Under Chapter 2A of the Duties Act 1997, equity partners who are foreign persons will be liable to pay a proportion of surcharge purchaser duty in addition to transfer duty, based on their percentage interest in the property they are acquiring.

Refer to Chapter 9 -Surcharge purchaser duty for detailed information regarding this topic.

Spouses who are separated at the time of transaction

A person who is legally married to a first homebuyer is not considered a spouse if they:

  • are not cohabiting with the person, and
  • have no intention of resuming cohabitation with the person.

References

Part 3 of the Property Tax (First Home Buyer Choice) Act 2022 – Eligibility

Schedule 3, Section 8 of the Property Tax (First Home Buyer Choice) Act 2022 – Meaning of Spouse

281 of the Duties Act 1997 – Approved shared equity schemes

Section 21 of the Duties Act 1997 – What is the “dutiable value” of dutiable property?

Chapter 2 of the Duties Act 1997 – Transactions concerning dutiable property

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