Gov’t Update: Land Tax vs Stamp Duty

Proposed changes to the NSW property tax system will give first home buyers the choice between paying an annual property tax or stamp duty.



The Government intends that legislation to establish the property tax will be introduced into the NSW Parliament during the second half of 2022 – With scheme commencement scheduled for Early 2023.

Under the proposed scheme, first home buyers will be able to choose between:

(a) Paying the usual amount of stamp duty based on the ‘dutiable value’ of your property


(b) Paying an annual property tax based on the unimproved land value of the property


Similar to previous government initiatives, the scheme is targeted toward individuals who have not previously owned or co-owned residential property in Australia or received previous First Home Buyer grants or duty concessions.

Unlike other schemes, however, most of which have been capped at purchases of $800,000 – the property tax option will be available for properties for up to $1.5 million.

Similarly, whilst previous schemes have been targeted solely at owner-occupied purchases, the property tax option will be available for both Owner Occupied and Investment purchases.


Eligible first home buyers who sign a contract of purchase on or after 16 January 2023 will be eligible to opt into the property tax and will not be required to pay stamp duty in order to complete their transaction.

Eligible first home buyers who sign a contract of purchase between the passage of the legislation and 15 January 2023 will be required to pay any applicable stamp duty, however from 16 January 2023, they will be able to apply for and receive a refund of that duty.

Information on how to apply for the property tax will be made available once the legislation is enacted.


By paying the typical amount of stamp duty (based on the ‘dutiable value’ of a property), first home buyers are typically up for an additional 4-5% on top of the contracted purchase price of their property.

By opting into paying an annual property tax (based on the ‘unimproved land value’ of a property), first home buyers may reduce their up-front costs to as little as ~0.3% of the land value of their property.

The property tax rates for 2022-23 will be:

–      $400 plus 0.3 percent of land value for Owner Occupied Properties

–      $1,500 plus 1.1 percent of land value for investment properties.

These tax rates will be indexed each year so that the average property tax payment rises in line with average incomes.


This initiative will lower the up-front costs of home purchases and help to boost the rate of home ownership in NSW. In total, these measures will offer support to about 97 percent of all first home buyers, or about 55,000 people per year.

With regards to Owner Occupied properties, recent modeling has shown that it could take up to 18 years for the accumulated land tax to break even with the up-front stamp duty that would be payable on a $1.5 million home.


As always, feel free to reach out to me or one of the team at Smartmove Professional Mortgage Advisors for any mortgage or finance advice questions/ needs.

*Information sourced from: NSW Government 

**The above is based on information provided by the NSW Government, which is yet to be legislated and as such may be subject to change.

Written by Asher Levitt

With a passion for the property, real estate and financial services sectors, my career saw me working as a Business Analyst for multiple firms before joining Smartmove as a Mortgage & Finance Advisor in 2020. With a range of experience in both Accounting and Property Finance, I look forward to bringing this varied experience to help clients achieve their property and finance goals.


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