The New South Wales (NSW) Treasurer, The Hon. Dominic Perrottet MP, announced the following changes to State taxes and grants as part of the 2017 Budget
Duties
First Home Buyers Assistance
From 1 July 2017 the First Home New Home scheme will be replaced by the First Home Buyers Assistance scheme. First home buyers will not have to pay duty for both new and existing homes for properties up to $650,000. The duty will be reduced for amounts between $650,000 and $800,000. There is no change to the cap for vacant land.
Shared Equity Scheme
From 1 July 2017, the shared equity scheme applies where a home buyer purchases a property with an approved equity partner. This scheme helps people who may not otherwise be able to afford their home on their own to become a home owner by purchasing with an equity partner.
New Home Grant Scheme
The New Home Grant scheme, providing a $5,000 New Home Grant will close on 30 June 2017.
First Home Owner Grant (New Homes) from 1 July 2017
First home owners can access a $10,000 grant for:
building a new home under a home building contract where the contract price, when added with the land value, does not exceed $750,000
a new home being built by an owner builder where the value of the land and building does not exceed $750,000 or purchasing a new home worth up to $600,000.Purchases ‘off the plan’ by investors
From 1 July 2017, all residential purchases by investors will be excluded from the 12 month off the plan transfer duty liability deferral.
Purchasers who wish to obtain the deferral will need to declare an intention to occupy the property as their principal place of residence (PPR).
If a purchaser claims an entitlement to the deferral, but the land is not occupied as the purchaser’s PPR for a continuous period of 6 months, commencing no later than 12 months after completion of the sale or transfer, interest and penalty tax may apply from the liability date.
Land tax
Principal place of residence
The principal place of residence exemption will be extended to land used and occupied by an owner under a shared equity scheme as defined above. The exemption will apply from the 2018 tax year.
Surcharge purchaser duty
Rate of duty
From 1 July 2017, the surcharge purchaser duty rate will increase from 4 per cent to 8 per cent.
Permanent residents (including New Zealand citizens)
From 20 June 2017, permanent residents, including New Zealand citizens holding a Special Category visa (subclass 444), will be exempt from surcharge purchaser duty on their principal place of residence, if they occupy the home for a continuous period of 200 days within 12 months of purchase.
The exemption will be granted if the person declares that they will complete the 200 day residence requirement.
Commercial residential property
Commercial residential property will be exempt from surcharge purchaser duty. This amendment is retrospective to 21 June 2016. A refund will apply if you paid surcharge purchaser duty.
The Chief Commissioner will make a determination identifying classes of commercial residential property.
Surcharge Land Tax
Rate of tax
From the 2018 tax year, the surcharge land tax rate will increase from 0.75 per cent to 2 per cent.
Permanent residents (including New Zealand citizens)
From the 2018 tax year, permanent residents, including New Zealand citizens holding a Special Category visa (subclass 444), will be exempt from surcharge land tax on their principal place of residence, if they occupy the home for a continuous period of 200 days in the land tax year.
The exemption will be granted if the person declares that they will complete the 200 day residency requirement.
Commercial residential property
From 2018 tax year, commercial residential property will be exempt from surcharge land tax. If you paid surcharge land tax for the 2017 tax year, you will be eligible for a refund.
The Chief Commissioner will make a determination identifying classes of commercial residential property.
Insurance duty
Lenders Mortgage Insurance (LMI)
From 1 July 2017, an LMI policy will be exempt insurance in NSW meaning an insurer who issues a LMI policy will no longer need to pay duty on this premium where the policy is over property in NSW.
LMI means insurance taken out by lenders to cover loss arising from default by the mortgagor.
Crop and Livestock Insurance
From 1 January 2018 crop and livestock insurance will not be liable to duty.
Small business exemption
From 1 January 2018 small businesses are not liable to duty on certain types of insurance.
The exemption will apply to the following types of insurance:
Commercial vehicle insurance – for a motor vehicle used primarily for business purposes
Commercial aviation insurance – for an aircraft used primarily for business purposes
Occupational indemnity insurance – insurance covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover within the meaning of the Medical Indemnity Act 2002 of the Commonwealth)
Product and public liability insurance – insurance covering liability for personal injury of property damage occurring in connection with a business or arising out of the products or services of a business. A small business is an entity within the meaning of section 152-10 (1AA) of the Income Tax Assessment Act 1997 of the Commonwealth for the income year in which the insurance is effected or renewed. At present, you are a small business entity if you are an individual, partnership, company or trust that:
is carrying on a business, and
has an aggregated turnover of less than $2 million.
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