I’m thinking of buying at 250K unit early next year and claim the FHOG and live there for 6 months then rent it out. As it is a PPOR (initially) and its my first PPOR I get a full stamp duty exemption which equates to $7240. Now I am then thinking of in 5 years of buying a house worth approximately $1,000,000, this purchase being my second PPOR will attract a whopping $40,490 in stamp duty. I could save my money and not buy the cheap unit and then not have to pay this massive stamp duty with the expensive property.
I could on the other hand buy the unit (250K) as an IP and not claim the FHOG and also pay the 7K stamp duty. and then in 5 years, I could buy the $1,000,000 property and claim the FHOG and the stamp duty concession, though I may have to pay some stamp duty still as I don’t know if the concession covers the full 40K stamp duty..
What does everyone think??
I got this info and the calculator off the website: http://www.legalmart.com.au/calculators/nsw/concession_rate.htm
Cheers,
ChrisChris, your $1M property is way above the threshold in NSW and it doesn't make any difference if it is your first PPoR or your second or an IP for that matter, the stamp duty is the same $40490. I suggest you move up to Queensland! You get a discount if it's your PPoR, ie $31000 for PPoR (first or second makes no difference as the first home owners exemption phases out after 500k) or $38175 for an IP. Here's a good calculator that can be set to any state:
http://www.creditworld.com.au/stampdutycalculator.html?ppce=ZT1BZHdvcmRzJm49U3RhbXArRHV0eStDYWxjdWxhdG9ycyZjPTAuNA%3D%3D&gclid=CIT7zYuBppcCFQsQagod7gTkJA
In Qld at least, you only pay stamp duty on the land if you're building, and not on the house, so if you're going to be spending $1M, then It's worth considering. It all depends on your ratio of land to house of course. Vacant land has different threshold for first home owner status, but a $1M property would no doubt have land worth about $500k or more, which would be well above the threshold.^^ what stumpCam said is correct.
a $1M property, whether it is your first or 2nd, in NSW, will always cost you stamp duty…
The first home owners reduction on stamp duty applies for first home buyers where property value < $500k. (and the reduction is phases out between 500k – 600k)
There is also no guarantee that the FHOG and stamp duty exemptions will still be around in 5 years – though I can't see it getting any easier for FH buyers.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks heaps guys you solved the problem. Its bad news as I can’t claim that 40K, but oh well its the rules. The IP next year is still looking alright.
Thanks again,
Chris
Hi Terry, I know we can still be eligible for the FHOG after buying an IP (since the 1st July 2000 I believe) but I've assumed that we will also be eligible for first home owner stamp duty exemption after buying an IP. We can't really assume anything with government policy of course, especially since the stamp duty is a state government tax and the rules may vary from state to state. Have you had any experience of this?
Regards, S/C.
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