Due to a global Microsoft outage, we are experiencing technical difficulties that may make it hard to reach us.

Property law – NSW Government Budget

Lindsay McGregor, Avant Law - Partner, Head of Property

Thursday, 14 July 2022

gavel with law book


On 21 June 2022 the New South Wales (NSW) Treasurer, the Hon. Matt Kean MP announced some important property tax changes as part of the 2022-2023 state budget. These changes are:‍

  • First Home Buyer Choice where a first-time home buyer purchasing a property up to a value of $1.5 million will have the choice of either paying transfer duty or an annual property tax; and
  • Shared Equity Scheme Trial where, for an eligible buyer, the NSW government will contribute up to 40% of the purchase price of a dwelling in exchange for an equivalent equity share in that dwelling.

These important property tax changes are aimed at addressing housing affordability by lowering the up-front cost of home purchases, boosting the rate of home ownership and assisting frontline workers, single parents and single older people in buying a home.

First Home Buyer Choice

What? Under the proposed changes, an eligible first home buyer purchasing a property worth up to $1.5 million will be able to choose whether to pay an upfront amount for transfer duty or pay an annual property tax.

This is in addition to any first homeowner grants or assistance currently offered by the NSW Government.  This assistance currently includes a grant of up to $10,000 under the
First Home Owners Grant (New Homes) Scheme and an exemption or reduction of transfer duty on the purchase of a home with a value of up to $800,000 under the
First Home Buyer Assistance Scheme. 

The changes allow a first home buyer buying a property with a value up to $1.5 million, to choose to pay either an annual tax or transfer duty.  Should the first home buyer choose the annual tax, they would pay $400 plus 0.3% of the land value of the property per annum.  Should the property later be used an investment property the annual property tax increases to $1,500 plus 1.1% of the land value of the property. 

Tax assessments will be issued for each financial year and a pro rata adjustment will be made if the property is sold within that financial year. 

By contrast, if the first home buyer choses to pay an upfront transfer duty, the amount payable is calculated at a rate of $44,095 plus $5.50 for every $100 that the purchase price is over $1,089,000. This means the duty payable on a property with a value of $1.5 million would be $67,375.

Who? To be eligible under the First Home Buyer Choice you must be over 18, at least one buyer must be an Australian Citizen or permanent resident, you or your spouse must not have owned or co-owned residential property in Australia, you must move into the property within 12 months and live in it continuously for at least 6 months.  

It is important to note that if the first home buyer was eligible for a stamp duty exemption, then they would not choose to pay an annual property tax.  But for someone eligible for a concession or for someone not eligible for any concession or exemption, the annual property tax may be a better choice.

When? This scheme will only apply to contracts entered into on or after 16 January 2023 although there will be some transitional exemptions meaning first home buyers who sign a contract between the passage of the legislation and 15 January 2023 will be able to opt in and apply for a refund of any transfer duty already paid. 

How? The Revenue NSW Website will be updated from 16 January 2023 and that will outline the application process.  Avant Law can assist in applications from that date. 

Is it for you? It is really a decision for any buyer eligible for the First Home Buyer Choice to choose the tax that is best for them. Thought should be given as to how long they expect to hold the property and if they anticipate upgrading in the short to medium term, then this might be a good choice to make. If, however a buyer intends to occupy the property for 20+ years, then they may be better off choosing upfront transfer duty. Each buyer will have to weigh up this decision based on their own situation and circumstances combined with advice from their accountant or financial planner.

Shared Equity Scheme

What?  The Shared Equity Scheme is a trial program where the NSW Government will provide a proportion of the purchase price for a property in exchange for an equivalent percentage of equity that property.  This contribution caps out at a maximum of 40% of the purchase price of a new dwelling and 30% of the purchase price of an existing dwelling.

Participants will still be expected to maintain the property and pay 100% of all home ownership costs like rates, strata fees and insurance costs.

Currently, the trial scheme will be limited to the two financial years ending 2023 and 2024 and capped at 3,000 places for each of those years.  It only applies to properties with a purchase price less than $950,000 in Sydney and major regional centres or a purchase price less than $600,000 in other regional areas.

The applicant’s household income must be no more than $90,000 for singles and $120,000 for couples in order to apply.

This scheme is being offered in addition to the First Home Buyers Choice and any other first homeowner grants or assistance currently offered by the NSW Government.

It will not be possible to apply for both the NSW and Commonwealth Government shared equity schemes over the same property.

Participants should be aware of the distinction between a loan where the amount of the loan is repayable with interest, and a shared equity scheme, where the equity partner has a stake in the future value of the property.

Who? The scheme will be available to participants over the age of 18 who are an Australian or New Zealand citizen or a permanent Australian resident.  The person must be a single parent of a child or children under 18 years, a single person who is 50 years of age or older or a first home buyer who is a frontline worker (a nurse, teacher or police).

Additionally, the property must be the applicants principal place of residence, they must not own an interest in other property in Australia or overseas and they must have a minimum 2% deposit towards the purchase price.

When? The trial scheme will begin in January 2023 but as it is only open for the financial years ending 2023 and 2024.  This means it will only be available for a period of 18 months and not the 2 years being advertised.  Additionally, the NSW Government’s commitment to the program is currently capped at $780.4 million.  If the trial is discontinued, it is not expected that users will need to repay the NSW Government for any contribution made during the trial scheme unless their circumstances change.  A participant will be required to repay the Governments equity contribution if their income exceeds the applicable threshold on two consecutive annual review reporting dates.

How? The Revenue NSW Website will be updated from 16 January 2023 and that will outline the application process.  Avant Law will be able to assist in applications from that date.

Is it for you? The Shared Equity Scheme is open to a narrow range of eligible applicants.  Modifications or renovations to the property may require Government approval.  This may mean you are unable to carry out desired modifications to the property without engaging in red tape.  Annual reviews as to ongoing eligibility will also create paperwork and require ongoing attention. Whilst the NSW Government will share any increase in the value of the property, it will not pay for any associated ongoing costs.


The First Home Buyer Choice and Shared Equity Scheme will have limited application but for some, it will allow them to enter the property market far easier than before.  The NSW Premier, Dominic Perrottet has said the initiative is designed to remove large upfront costs and increase participation of first home buyers under the age of 35.

The First Home Buyer Choice could provide some significant upfront savings but if it is intended to own the property for a long time, or convert it to an investment down the track, careful planning should be made.

Similarly, the Shared Equity Scheme may provide some significant upfront savings but if your circumstances are likely to change in the short to medium term, the red tape and ongoing costs may not outweigh the benefits.

We can help you

If you have any questions, or would like more information about how we can assist you or your practice, please call 1800 867 113, or to organise a confidential discussion at a time that suits you, please click here 

About the author

Lindsay McGregor

Lindsay McGregor is a lawyer and the Head of Property in our Avant Law team. He has been working in property related matters for over 20 years. He was previously a partner at a highly regarded national firm and has considerable experience in property transactions across Australia. He has previously acted for some of the country’s biggest property investors and developers and can use this experience to your advantage.


The information in this article does not constitute legal advice or other professional advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of this content. The information in this article is current to 15 July 2022.  Legal services are provided by Avant Law.  Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by Avant Law Pty Limited are members of the scheme. © Avant Mutual Group Limited 2022

To Top