30 Jun First home buyer reforms, FY starting 1 July 2017
By now you would have seen a lot of businesses advertising EOFYS – End of financial year sales. Aside from all the discounts you can get when you’re spending money during the sales it’s a fun phrase to say and type – EOFYS, EOFYS, EOFYS.
More seriously though, EOFYS is also a time of the year where policies that have been announced by state or federal governments comes into effect. This financial year, there are many changes being introduced that will affect first home buyers, so if you’re planning to buy a home in the next year it’s worth knowing what they are.
Stamp duty changes
The Victorian state government has announced changes to stamp duty that will affect first home buyers. Often cited as a huge expense, first home buyers who purchase a property up to $600,000 will be exempt from paying stamp duty. Those purchasing a property valued at between $600,000 and $750,000 will be eligible for a concessionary rate (subject to meeting certain criteria).
What must you do to qualify?
As the Victorian state government is trying to help first home buyers, you must prove that you, and/or your partner will live in the home as your primary source of residence.
You will be required to prove that neither you, nor your partner have owned a property in Australia previously.
Anyone regardless of their source of income, employment or through pensions is eligible for the concession based on being a first home buyer.
What about buyers outside of Victoria?
The New South Wales state government has announced a similar policy. They will be abolishing stamp duty for first home buyers as well. The main difference is that instead of the threshold being $600,000, it will be marginally higher at $650,000 to reflect the higher property prices in the state. Buyers can expect to save up to $25,000 when purchasing their first home.
Currently in NSW, first home buyers are exempt from paying stamp duty if the property is valued up to $550,000.
Buyers who are spending more will also feel some relief, with stamp duty on properties valued up to $800,000 being discounted.
What about foreign buyers?
In an attempt to improve housing affordability, the New South Wales government has also announced they will be increasing the foreign buyer surcharge on stamp duty from 4% to 8% and land tax will increase from 0.75% to 2%.
In Victoria, the government have introduced the Vacant Residential Property Tax in addition to other measures previously announced to curb purchases by foreigner.
Both governments hope that these measures will improve housing affordability and help with reducing demand in the major centres.
Whether or not these changes will alleviate the pressure that first home buyers feel when entering the market for the first time remains to be seen. If you’re unsure of how these changes will impact you, then feel free to contact one of our team members and we’ll be happy to discuss your personal situation.