The New South Wales First Home Buyers Assistance Scheme provides eligible people seeking to purchase their first home with both grants and concessions
What is the Scheme?
The First Home Buyers Assistance Scheme provides first home buyers with exemptions and concessions on stamp duty. Having commenced at the beginning of July 2017, the intended purpose of the scheme is to help people acquire their first home.
This assistance primarily takes its form in exemptions and concessions on payable stamp duty. For persons who purchase properties under the scheme valued up to $650 000, the stamp duty that would be otherwise owed is abolished. For example, on a first home purchase of $650 000, this amounts to a saving of $24 740. This concession is then gradually reduced on first home properties purchased for up to $800 000.
Who is the Scheme for?
As suggested by its name, the First Home Buyers Assistance Scheme is targeted towards people seeking to buy their first home. More specifically, in order to be eligible for the scheme, a purchaser must be a natural person who is at least 18 years of age, who has not previously at any time owned residential property in Australia, or has previously received an exemption or concession under the First Home-New Home Scheme. Importantly, these eligibility criteria also apply to the purchaser’s spouse or de facto. Further, within 12 months of acquiring the property under the Scheme, either the purchaser or the purchaser’s spouse/de facto must occupy the property as their place of residence for an unbroken 6 month period.
Shared Equity Arrangements
The First Home Buyers Assistance Scheme also provides concessions for first home buyers that wish to purchase a property through a shared equity arrangement. This allows first home buyers to purchase property with thirds parties (e.g. their parents) and still receive a benefit under the Scheme. Under such an arrangement, an eligible first home buyer must purchase at least 50 per cent of the property.
The concession provided under the First Home Buyers Assistance Scheme is calculated based on the percentage of the property purchased by parties under the shared equity arrangement that are not eligible for the Scheme. An example is a first home buyer that purchases a property with his or hers parents for $650 000. If the first home buyer and their parents purchased the property, with both parties acquiring 50% of the property, the concession on the duty payable is estimated to be $12 370. If the interest acquired in the property by other parties is less than 5%, it is disregarded in the calculation of the concession.
In circumstances where a first home buyers purchase a property through a shared equity arrangement, the 6 month residency rule still applies.
Lenders Mortgage Insurance and Duty Payable
Another important aspect of the Scheme relates to lenders mortgage insurance (LMI). From 1 July 2017 LMI policies taken over NSW property are exempt from paying duty on the premium of the policy. This again will make purchasing property more affordable in circumstances where first home buyers are required to purchase LMI by their lender.
How to Apply for the Scheme
First home buyers can apply for an exemption or concession under the Scheme after the exchange of contracts between purchaser and vendor. Application for exemption or concession under the Scheme is made by completing a First Home Buyers Assistance Scheme form, which is lodged with Revenue NSW.