NSW STATE BUDGET FOR 2022-2023
Article written by David Low
/ CHANGES TO CERTAIN NSW STATE PROPERTY TAXES IN 2022 BUDGET: DO THEY AFFECT YOU?
For certain first home buyers: to pay upfront transfer duty (usually known as ‘stamp duty’), or
alternatively, to pay annual land tax during your period of ownership? In its 2022-2023 budget, the NSW state government has proposed to enact legislation in the second half of calendar year 2022, which will give first home buyers purchasing properties with a value of no greater than $1.5 million to pay:
/ either a one-off transfer duty (otherwise known as stamp duty) on the market value of the property at the time of sale; or
/ in lieu of stamp duty, an annual ‘property tax’ on the unimproved value of the land (not improvements), during the first home buyer’s period of ownership.
Importantly, the election of the first home buyer will not bind future purchasers of the property. Upon resale, if the subsequent purchaser is not an eligible first home buyer, then the current regime of payment of stamp duty by the purchaser will apply.
This measure varies from other proposals, about which there has been speculation in the media. It will give eligible first home buyers a choice, perhaps depending upon their level of savings, but the first home buyer’s election will not bind future purchasers.
This measure will require legislation to be passed in the NSW parliament.
/ INCREASE IN THE FOREIGN INVESTOR SURCHARGE LAND TAX FROM THE 2023 LAND TAX YEAR
The ‘foreign investor surcharge land tax’ applying to residential land in NSW owned by foreign persons will double to 4% from the 2023 land tax year.
For this purpose, a “foreign person” includes an individual, a corporation or a trust. Again, for this purpose, “residential land” includes vacant land zoned or designated as residential, land on which there are one or more dwellings or buildings under construction, or strata lots.
Foreign owner surcharge land tax is in addition to any land tax the purchaser may already pay. It may be payable, even if the foreign purchaser does not pay land tax.
It is also additional to the “transfer duty” (previously known as stamp duty), to which the transaction may be subject.
For advice regarding your particular circumstances, contact any of the following experts at Madison Marcus who can advise on how you may be affected by these changes to NSW duties:
This summary contains general advice only and does not take into account your particular circumstances. For advice on your particular circumstances, please make contact with any of our above-mentioned experts.