For lawyers, the stamp duty reform “makes entering the real estate market even more accessible”

Stamp duty reforms, as announced in yesterday’s (21 June) NSW budget for 2022-23, are exciting for lawyers looking to buy their practice, further lowering barriers to entry for these professionals .

As reported yesterday by Lawyers Weekly’s sister brand, The AdviserFirst-time home buyers in NSW will now be able to choose between an upfront payment or a reduced annual property tax from next year as part of First Home Buyer’s Choice reforms.

New South Wales Premier Dominic Perrottet has confirmed the state will give borrowers the option of paying stamp duty or annual property tax on a multi-billion dollar housing project announced in the New South Wales Budget 2022-23 to provide quality, accessible and affordable housing across New South Wales.

The property tax option will be available for properties up to $1.5 million.

Under the new initiative, first-time home buyers (FHBs) who opt for property tax will pay an annual property tax of $400 plus 0.3% of the property’s assessed value.

Starting January 16, 2023, eligible first-time home buyers who opt into First Home Buyer’s Choice will not pay stamp duty on their purchase.

FHBs will continue to be eligible to apply for full stamp duty relief for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000. However, FHBs will not be eligible if they have received a first-time homebuyer grant or fee reductions.

All other buyers must continue to pay stamp duty as usual.

Speaking to Lawyers Weekly, Legal Home Loans sales manager Cullen Haynes said the move was “exciting reform” for FHBs.

“This will further reduce barriers for lawyers with a significant decrease in upfront transaction costs,” he explained.

When asked what this could mean for attorneys looking to buy across the state — and also for those across the country, gave calls for such nationwide reform – Mr Haynes said legal professionals nationwide can already access some great deals, such as buying with a 10% down payment and paying zero lenders (LMI) mortgage insurance.

“This reform makes entering the property market even more accessible for lawyers looking to buy in New South Wales,” he said.

“The government has not yet confirmed the date of enactment of the legislation and buyers cannot register before January 16, 2023. Those who buy between the date of enactment and January 15, 2023 will be able to request a refund of the duty stamp. So if you’d rather avoid paying stamp duty up front, you’ll have to wait until next year.

Lawyers should, Mr. Haynes stressed, do their due diligence in asking for a home loan pre-approval as the first step in the home-hunting process.

“Be clear from the outset on which option you choose with your broker, bank and broker, as transaction costs will be factored into your bank assessment,” he advised.

“If the lawyers choose the annual option, the banks will assess this as an expense commitment which will affect your ability to borrow.”

Looking ahead, Haynes noted that the full details of the reform have yet to be revealed.

“Buyers will pay 0.3% of the value of the land, but it is not known if this will vary from year to year. If so, as the value of your land increases over time, your annual property tax amount will also increase,” he said.

“It is also unclear over what period the tax will apply, if there will be an end point or if you will have to pay as long as you own the property. We also need to understand what your obligations will be if and when you sell.

For lawyers, the stamp duty reform “makes entering the real estate market even more accessible”

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Last update: June 21, 2022

Posted: June 22, 2022

Penny D. Jackson