How can NSW’s first home buyer assistance scheme help new homeowners?

Financially speaking, homeownership can be one of the biggest leaps that you will be taking in your life. It may look scary at first, but it is such a relief and an accomplishment once it’s done.

There are many financial roadblocks that may draw you back from becoming a homeowner. One of the solutions offered by the government is through home buying programs, such as the first home buyer assistance scheme.

What is the first home buyer assistance scheme?

In Australia, there are several assistance schemes that help first-time home buyers. One of these is the first home buyer assistance scheme.

The first home buyer assistance scheme grants eligible home buyers an exemption or a reduced rate when paying transfer duty or stamp duty. It can be a full or partial exemption from paying these duties, depending on the amount set by the scheme.

This assistance scheme aims to encourage Australians to buy homes, especially first-time buyers, by reducing its overall costs through this tax relief.

The first home buyer assistance scheme is a program in New South Wales (NSW) under the state’s Duties Act 1997. Other states and territories would have a slightly similar scheme and with a different name.

Property value and thresholds

Property value and thresholds will tell you if you’re totally or partially exempt from paying your transfer duty or stamp duty.

The table below applies to transactions on or after July 1, 2023. Transactions from previous years are covered by different thresholds. Transactions mean when you and your seller have exchanged contracts.

Concessional transfer duty rate means that its rate is reduced or that you are partially exempt from paying transfer duty.

This video shows some real-life cases of the first home buyers assistance scheme:

Read our article on home loans for first time buyers in Australia for more loan options as a first-time home buyer.

Reduced transfer duty rates

The table below shows how much your reduced transfer duty is if the value of the property is above $800,000 for new and existing homes, or $350,000 for vacant land:

Who is eligible under the first home buyer assistance scheme?

To be eligible under the first home buyer assistance scheme, you must be:

• 18 years old and above
• a citizen of or a permanent resident of Australia
• purchasing your first home
• planning to live in the purchased home for the next 12 months

These eligibilities have further explanations and definitions which you may want to consider. Additional requirements may also apply depending on your case.

Limits on purchase price

Under the first home buyer assistance scheme, the maximum purchase price of the property is:

• $1 million: if you’re buying a new or existing home; or
• $450,000: if you’re buying a vacant land for your new home

It must also be for buying the whole property, and not just a part of an existing one.

Applicant requirements

Aside from citizenship and residency requirements, there are other requirements under the first home buyer assistance scheme:

If you’re a single applicant:

• must be a first-time homeowner, i.e. you must not have owned or co-owned any residential property in Australia in the past
• over 18 years old (but can be waived by Revenue NSW at their discretion)
• must be an individual and not a company, partnership, or a trust (can also be waived by Revenue NSW in specific circumstances)
• a citizen of or a permanent resident of Australia

As for the age condition (i.e. 18 years old), it can be waived by Revenue NSW if it can be shown:

• that it will be used for the minor’s principal place of residence; and
• that the application is not used to circumvent any eligibility under the scheme

As for the condition that the buyer must be an individual, this requirement can be waived if a trustee buys a home for someone whom they are the legal guardian. Here, it’s allowed because the true buyer is the dependant and not the trustee.

If you’re buying with your partner or spouse:

• neither you, nor your partner or spouse:
  • owned or co-owned residential property in Australia before
  • is a previous recipient under the first home buyer assistance scheme
• you, or your partner or spouse, is a citizen of or a permanent resident of Australia

You will be disqualified if you’re buying with your partner or spouse, and they previously owned a residential property in Australia before or has been a previous recipient of the scheme.

This prohibition will also apply even if your partner or spouse is not buying a home or property with you.

If you’re buying a home with someone who is not your spouse or partner:

• eligibilities will apply individually, and:
  • the eligible buyer must be purchasing at least half of the home
  • the ineligible buyer must pay transfer duty on their share of the home

If you’re buying with a non-eligible person:

If you’re buying the property with another person who is not eligible under the first home buyer assistance scheme, it will be treated as a shared equity arrangement.

To use the scheme for your transfer duty as the eligible home buyer:

• you must acquire not less than 50% share in the ownership of the property; and
• you would have been qualified under the scheme if you were a sole purchaser

While you can still apply under the assistance scheme, your ineligible co-buyer will have to pay transfer duty on their share of the property.

Shared equity arrangement does not apply if it’s your spouse who is ineligible.

Definition of spouse or partner

For the purposes of the first home buyer assistance scheme, a spouse is:

• a person you’re legally married to; or
• a person you’re living with in a de facto relationship

However, even if you are legally married to someone, that person is not considered as your spouse or partner under the scheme if:

• you’re currently not living with them; and
• you do not intend to live with them

Residence requirements

One of the requirements for the first home buyer assistance scheme is that you must live in the home you’ve purchased.

This is to ensure that this scheme or program is used by those who really need it the most. For this, residence requirements are set, such as the following:

• If you're buying an existing home, you must:
  • occupy it as your principal place of residence
  • move into the property within 12 months
  • continuously live in it for at least 12 months
• If you're buying vacant land, you must:
  • intend to build a new home
  • move into the property within 12 months after its construction
  • continuously live in it for at least 12 months

These requirements apply to transactions entered on or after 1 July 2023.

Definition of new home

When the requirement refers to the term ‘home’, it also means that:

• it was not previously occupied or sold as a place of residence; or
• was substantially renovated; or
• built to replace demolished premises

Under the law, the following properties are also excluded:

• acquisition of a business or business premises
• purchase or transfer of a holiday home

Changes with residence requirements’ compliance

You must inform Revenue NSW right away if you cannot meet these residence requirements, since it will make you ineligible under the assistance scheme.

In effect, you will have to pay the appropriate transfer duty, or be charged with interest and penalties if you’ve concealed this information.

Exemption: Members of the Australian Defence Force (ADF)

Members of the ADF are exempt from the residence requirements under the FHBAS, subject to these conditions:

• the ADF member is enrolled to vote in NSW
• for joint applications, one of the applicants is an ADF member

Application process for first home buyer assistance scheme

Here’s a summary of the application process for the first home buyer assistance scheme:

1. Calculate your transfer duty: you can use Revenue NSW’s FHBAS calculator to check how much transfer duty you’re going to pay based on the type of home, value of the property, and its purchase price
2. Fill out some forms: after you’ve signed or exchanged contracts, you must then fill out the Application Form and the Purchaser/Transferee Declaration Form (note that transactions before 1 July 2023 have different forms)
3. Proving your identity: these forms are then submitted through your financial institution, conveyancer, or solicitor, along with the other requirements to prove your identity

Proving your identity

Both you and the person you’re applying with must prove your identity. The documents that can be used when proving your identity are arranged per Category. You must provide any of the documents listed under all these Categories:

• Category 1:
  • For Australian-born persons: Australian birth certificate
  • For foreign persons: Foreign passport, and current Australian visa or citizenship certificate
• Category 2:
  • Australian driver’s licence
  • Passport
  • Firearms licence
  • NSW photo card issued by RMS
• Category 3:
  • Medicare card
  • Motor vehicle registration
  • Centrelink or Department of Veterans’ Affairs card
  • Security guard or crowd control licence
  • ID card from a tertiary education institution
  • Debit or credit card

While there are alternatives to these documents listed under each Category, they will only apply in the absence of the ones listed above.

Appealing a decision on an FHBAS application

If your application has been denied, you can either:

• request a reassessment
• lodge an objection - must be done within 60 days after decision was made
• request a review

Penalties when applying for FHBAS

Providing any false or misleading information during your application for the first home buyer assistance scheme will result in penalties.

Revenue NSW can also reassess an initially approved application if it finds that the applicant has not complied with the scheme’s requirements (e.g. residence requirements).

Are there other assistance schemes for home buyers?

There are other assistance schemes for home buyers aside from the first home buyer assistance scheme offered in NSW. These schemes or programs also have their own eligibility and processes when applying.

Federal schemes for home buyers

At the federal level, here are some assistance schemes for first time buyers:

• First Home Super Saver Scheme (FHSS): making voluntary contributions to your superannuation, and have these amounts released when buying your first home if you’re eligible under the FHSS
• First Home Buyers Guarantee (FHBG): portion of your home loan from authorized lenders is guaranteed by Housing Australia, which can be up to a maximum amount of 15% of the value of the property, subject to assessment of the lender

Other assistance schemes in NSW

There are also other schemes in NSW, other than the FHBAS, which aim to help first-time home buyers:

• First Home Owner (New Home) Grant: a $10,000 grant towards the purchase price for first home buyers, who are either building or buying a home
• Shared Equity Home Buyer Helper: a percentage is contributed by the NSW Government for a new home (up to 40%) or for an existing dwelling (30%)

Schemes for home buyers of other states

There are also other home buyers' assistance schemes offered by other states and territories. Here are some of these schemes:

• Victoria: first home buyer duty:
  • exemption for properties with value up to $600,000; or
  • concession for properties with value up to $750,000
• Queensland: Transfer duty concessions and exemptions for:
  • new and existing homes valued under $550,000; or
  • vacant land valued under $400,000
• Western Australia:
  • first home buyers grant of $10,000 for new properties priced below $750,000
  • stamp duty exemption on properties priced below $430,000
  • reduced stamp duty on properties priced between $430,000 and $530,000
• South Australia:
  • first homeowner grant of up to $15,000 for properties valued at $650,000 or less
• Tasmania:
  • concession for first home buyers for up to 50% reduction on transfer duty for homes valued at $600,000 or less
• Australian Capital Territory:
  • Home Buyer Concession Scheme for properties valued up to $1,455,000 subject to income thresholds
• Northern Territory:
  • first homeowner grant of $10,000

What do you think of the first home buyer assistance scheme? Let us know in the comment section below.