If you are buying your first home in Eastwood, stamp duty could be the biggest cost you can legally avoid. In NSW it is called transfer duty, and the price of the property you pick decides whether you pay it.
This article is for Eastwood buyers who are weighing up a purchase and want to know how the exemption affects their price ceiling and their home loan. We have also added a note for investors, because the rules work differently for them.
Who Gets a Stamp Duty Exemption in NSW?
First home buyers in NSW may be eligible for a full exemption or a reduced rate of transfer duty under the First Home Buyers Assistance Scheme. Eastwood sits in Sydney's north-west, so the NSW rules apply to every purchase here.
The scheme has a few conditions. The purchase must be for the whole property, and the value must be within the thresholds. Each buyer must be an individual aged 18 or over, and at least one must be an Australian citizen or permanent resident. You and your spouse or partner must never have owned or co-owned residential property in Australia. You must also never have received an exemption or concession under the scheme. Check these with Revenue NSW or your solicitor before you sign a contract.
If you are buying with a partner, ask whether both of you count as first home buyers. If only one of you does, the result can change, and it is worth sorting out before you make an offer.
Stamp Duty Thresholds: Where $800,000 and $1 Million Fit
An eligible first home buyer pays no transfer duty on a new or existing home valued at $800,000 or less. A concessional rate applies above $800,000 and below $1,000,000. Buyers paying $1 million or more are not eligible for any exemption or concession.
These limits apply to contracts exchanged on or after 1 July 2023. The scheme also covers vacant land, with reduced rates available for land under $450,000. If you plan to build, land valued at $350,000 or less gets a full exemption.
The concession between $800,000 and $1 million is a sliding scale. Revenue NSW has a First Home Buyer Assistance Scheme calculator that estimates what you would pay at a given price. Use it rather than guessing.
Why Your Price Ceiling Matters More Than Your Deposit
Your price ceiling is the highest purchase price your loan amount and deposit can support, and for first home buyers it should be set with the $800,000 line in mind. Working it out before you search saves you from falling in love with a place that costs you more in duty.
That is where a home loan pre-approval helps. It gives you a loan amount in principle from a lender, and adding your deposit shows the price you can afford. Your borrowing capacity depends on your income, expenses and debts, so the figure is personal to you.
The trade-off is that pre-approval is not a final offer. The lender still assesses the property and your circumstances at the home loan application stage, and approval can lapse or change if your situation does.
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A Worked Example: Two Buyers Weighing Up a Unit and a House
Consider a couple, both first home buyers, who are choosing between two Eastwood properties. One is priced at or under $800,000 and the other is a little over it. They want to live in the home, and neither has used the scheme before.
Their broker runs both options through their pre-approval and the Revenue NSW calculator. The property at or under $800,000 carries no transfer duty. The dearer one carries a concessional amount, which is lower than full duty but still real, and it has to be paid from their savings at settlement.
They choose the cheaper property. Their cash is no longer tied up in duty, and they can keep a buffer for moving costs and repairs. The cost of that choice is a smaller property or a different layout. Whether that suits them is a personal call, and the numbers only inform it.
Their broker also explained that a lower price does not automatically mean a lower risk. They still need a loan they can service if rates rise, and an owner occupied home loan can be structured in several ways. Features like an offset account may suit them, though they often come with a higher rate or an annual fee, depending on the lender.
What the Exemption Means for a First Home Loan
Saving on duty does not lower your loan repayments. It means you have more of your own money available, which can go towards your deposit or a buffer, and a larger deposit can reduce the loan amount you need.
If you are starting out, our first home buyers page explains how we work with buyers at this stage. Government schemes can also affect your deposit. The First Home Guarantee Scheme has its own eligibility rules and price caps, and these are separate from the NSW duty exemption. Check both before you assume you qualify for one because you qualify for the other.
Stamp Duty for Investors: What the Exemption Does Not Cover
The first home buyer exemption is tied to living in the property, so a purchase made only as an investment does not qualify. If you invest in property in Eastwood, plan for transfer duty as a cost on top of your deposit.
Transfer duty is usually paid at settlement. That means it needs to sit inside your cash plan alongside legal fees and other purchase costs. Our investment loans page covers how lenders look at rental purchases.
Transfer duty on an investment property is generally not an immediate tax deduction, and it may be relevant to the capital gains tax cost base. Confirm how this applies to you with your accountant or the ATO before you decide.
Questions to Ask Before You Exchange Contracts
The questions to settle before exchange are whether you qualify, where the contract price sits against the thresholds, and whether you meet the eligibility requirements, including that you have never owned residential property in Australia. You can only claim an exemption you are entitled to, and getting it wrong can lead to duty being payable later.
Speak with your solicitor or conveyancer about the contract and with Revenue NSW about eligibility. Your broker can check the finance side, including the loan amount, the structure and whether your pre-approval still stands.
If you are deciding whether to buy now or wait, call one of our team or book an appointment at a time that works for you. We will map out your price ceiling, check how the duty rules affect your plans and talk you through your home loan options from lenders across Australia.
Frequently Asked Questions
Do first home buyers pay stamp duty in NSW?
Eligible first home buyers pay no transfer duty on a new or existing home valued at $800,000 or less. A concessional rate applies above $800,000 and below $1 million, and no concession applies at $1 million or more.
Does the stamp duty exemption apply to investment properties?
No. The first home buyer exemption is tied to living in the property, so a purchase made only as an investment does not qualify. Talk to your accountant about any tax effects.
Is stamp duty the same as transfer duty in NSW?
Yes. In NSW, stamp duty is officially called transfer duty. It is charged on the value of the property you buy, unless you qualify for an exemption or concession.
How does home loan pre-approval help with the stamp duty threshold?
Pre-approval shows the loan amount a lender may offer you. Added to your deposit, it gives you a price ceiling, so you can search at or under the threshold. It is not a final approval.
