A first home buyer may choose to opt into property tax if they meet the criteria of an eligible purchaser/transferee, the transaction is an eligible transaction and they satisfy the residence requirement.

Eligible purchaser/transferee

An eligible purchaser/transferee is a first home buyer as defined in Section 5 of the Property Tax (First Home Buyer Choice) Act 2022 and means a person who at the time the application is made:

• is an individual who is at least 18 years of age, and
• has not, or whose spouse has not:
  • at any time, owned (either solely or with someone else) residential land in Australia other than property owned solely as trustee or executor
  • been a party to a relevant application under the Duties Act,1997 or the Property Tax (First Home Buyer Choice) Act 2022 or other Act prescribed by the Regulations
• is a first home buyer who is an Australian citizen or permanent resident of Australia or if there is more than one eligible purchaser/transferee, at least one is an Australian citizen or permanent resident at the time the application is made.

Companies, partnerships, and persons acting as a trustee do not qualify as first home buyers. However, a beneficiary under an approved trust arrangement may be an eligible transferee. More information regarding approved trusts is located in Chapter 8 – Approved trusts.

Definition of a spouse

Under Schedule 3, Section 8 of the Property Tax (First Home Buyer Choice) Act 2022, a person is the spouse of another person if they are legally married, or they are in a de facto relationship.  Note: There is no minimum period of cohabitation needed to establish a de facto relationship under the Interpretation Act, 1987.

Equity partners

For transactions that include both eligible purchasers/transferees (first home buyers) and equity partners (non-first home buyers), the eligible purchasers or eligible transferees must be acquiring at least a 50% share in the ownership of the property. This guide provides further details in Chapter 7 – Buying with equity partners.

Eligible transactions

Under Section 14 of the Property tax (First Home Buyer Choice) Act 2022, a transaction is eligible to opt into property tax if:

• The transaction:
  • was first signed on or after 11 November 2022, or
  • is an off the plan purchase contract, first signed on or after 11 November 2021, which settles on or after 11 November 2022.
• it is for the acquisition of residential land (new or existing home) in NSW or vacant land in NSW that will be used as residential land
• it is for the whole of the land, or is an exclusive land use entitlement
• the dutiable value of the land does not exceed
  • for vacant land - $800,000 or
  • otherwise - $1,500,000
• all eligible purchasers/transferees agree to opt in.

For the purpose of determining if a transaction is eligible to opt into property tax, Section 9 of the Property tax (First Home Buyer Choice) Act 2022 defines Residential land as:

Land that contains either of the following that is suitable for occupation or use as a dwelling—

1. a building,
2. a strata-type lot, including associated utility lots, and
3. the land is, or is suitable to be, occupied or used predominantly for residential purposes.

This includes a house, townhouse, strata unit, company title unit, flat or duplex.

Where the property is a strata-type lot that is acquired under a transaction that includes car-parking or utility lots on separate titles, these utility lots will be considered as part of the property and the value of these lots will be included in the dutiable value.

Vacant land has the same meaning as Section 25 of the Duties Act, 1997. This includes land that is substantially vacant apart from there being on that land the remnant of any building, or any other object or structure, that the Chief Commissioner is satisfied has been preserved because of its heritage significance.

Ineligible transactions

A purchase or transfer of business premises, a holiday home or primary production land as defined in Section 10AA of the Land Tax Management Act 1956 are not eligible transactions.

Unlike the First Home Buyer Assistance Scheme, a transfer of farming property on which there is a private dwelling is not an eligible transaction.

Residence requirement

To opt-in to property tax, an eligible purchaser/transferee must meet the residence requirement as set out in Section 15 of the Property Tax (First Home Buyer Choice) Act 2022.

The residence requirements are as follows

1. For new or existing homes, the home must:
   • be occupied by at least one of the eligible purchasers/transferees as their principal place of residence and
   • be occupied for a continuous period of at least 6 months and
   • the occupation must start within 12 months after the land is transferred.
2. For the purchase or transfer of vacant land, the land must be:
   • intended to be used as the site of a home and
   • the home is to be occupied as the principal place of residence by at least one of the eligible purchasers or eligible transferees

Note: Once vacant land is subject to property tax, the owner-occupied rate is applied for a period of up to 5 years provided the criteria in Schedule 1 clause 6 of the Property Tax (First Home Buyer Choice) Act 2022 is met.

Change of circumstances

Revenue NSW must be notified if circumstances change and the eligible purchasers/transferees acquiring residential land (new or existing home in NSW) are unable to meet the residence requirement.

If there is good reason, approval may be sought from Revenue NSW to:

• reduce the period of occupation by a first home buyer, or
• commence occupation by a first home buyer at a later date or
• exempt a first home buyer from the residence requirement.

The approval or exemption may be given if it is more than 12 months after the land is transferred or the first home buyer no longer occupies the land as a principal place of residence.

If an eligible purchaser/transferee does not meet the residence requirement and approval is not granted to modify the residence requirement as above, the land will be treated as land wrongly opted in. Transfer duty and any interest or penalty applicable from the date of the transaction must be paid

Permanent members of the Australian Defence Force

Permanent members of the Australian Defence Force do not have to meet the residence requirement if:

• at least 1 of the first home buyers is a member of the Permanent Forces of the Australian Defence Force, within the meaning of the Defence Act 1903 of the Commonwealth (This does not include a member of the Army Reserve, Naval Reserve or Air Force Reserve), and
• each first home buyer is enrolled to vote in State elections under the Electoral Act 2017.

Helpful information

Time the application is made

Time the application is made means the date that the applications is processed on EDR or the date the application is submitted to Revenue NSW in eDuties.

Eligible purchasers/transferees who are foreign persons

An individual who is a permanent resident of Australia and is eligible to opt-in to the First Home Buyer Choice (property tax) may still be considered a foreign person in accordance with Section 104J of the Duties Act 1997 and Section 5 of the Land tax Act 1956 No 27. An eligible purchasers/transferees considered a foreign person, may be liable to pay surcharge purchaser duty and/or land tax surcharge on the proportion they acquire. See Chapter 9 - Surcharge purchaser duty for more details.

Spouses who are not an eligible transferee

If the eligible purchaser/transferee’s spouse has previously owned a home in Australia or has been a party to a relevant application under the Duties Act 1997 or the Property Tax (First Home Buyer Choice) Act 2022 or other Act prescribed by the Regulations, the eligible transferee will not be eligible to opt into property tax regardless of whether the spouse is also a purchaser or transferee under the transaction.

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.

Eligible purchaser or eligible transferee under 18

In some circumstances, an individual who is under 18 years of age may be considered an eligible purchaser/transferee if the home is their principal place of residence and the application is not part of a scheme to circumvent the eligibility criteria. Matters of this nature must be lodged with Revenue NSW for consideration.