Buying a home in NSW? Find out what is stamp duty

First Home Buyers
Finance

19 January 2023

The short version

Stamp duty (officially transfer duty) is a state tax you pay upfront when you buy property in NSW. It's an upfront cost rather than something you add to your home loan.
First home buyers pay no duty on a home up to $800,000 and a reduced amount up to $1 million. For vacant land it's $350,000 and $450,000.
You need to move in within 12 months and live there for 12 continuous months to keep the concession.
On a house and land package you pay duty on the value of the land only, not the build.
The First Home Buyer Choice annual property tax option closed to new purchases on 1 July 2023.

Stamp duty is one of those costs that everyone has heard of but not everyone understands. In essence, stamp duty is a tax paid when you buy a home. In NSW, it’s officially called ‘transfer duty’ but we’ll refer to it as ‘stamp duty’ as that’s the most commonly used name. Below is how it works in NSW, and where first home buyers can pay less.

What is stamp duty?

If you think stamp duty sounds like an old-fashioned term more at home in renaissance Europe than modern-day Australia, you’re not far wrong! Stamp duty originated in Venice and Spain in the early 1600s.

Think of stamp duty as a tax that you pay when buying a property.

The idea was a payment to have a government officially physically stamp documents. The benefit for individuals was that the documents were then legally binding. The benefit for governments was to gain income and have a record of who owns which property.

In our digital age, documents are rarely literally stamped but the collection of stamp duty continues. NSW even had a Stamp Duties Act until 1997 when it was replaced with the more generic Duties Act. NSW briefly let first home buyers swap stamp duty for an annual property tax, but that option closed in 2023. More on that further down.

Who collects stamp duty?

Within Australia, the collection of duties is a state and territory responsibility, so details and amounts payable vary from state to state. This article focuses on stamp duty in New South Wales (NSW).

The income the government gains from collecting stamp duty goes into general revenue along with taxes that pay for government services like hospitals, schools and roads. So, paying it is not a bad thing in principle but there’s no doubt a stamp duty bill can hit hard financially among all the other costs associated with buying a home.

How much is stamp duty in NSW?

As we’ve mentioned, stamp duty amounts vary between Australian states. Within each state, stamp duty increases along with the price of the home (and the brackets change each year according to inflation) but is usually within the tens of thousands of dollars.

For a buyer who isn't a first home buyer, a home in the $850,000 to $1 million range attracts duty in the tens of thousands, and the bill climbs with the price. Run your own number through the calculator below for the current figure.

So, what is the formula for stamp duty in NSW? The easiest way to estimate stamp duty is to use the Revenue NSW Calculator. This calculator talks about ‘land’ but this is the option you should choose whether you are buying vacant land, a house or a house-and-land package. You can use the calculator to experiment with different purchase prices.

Stamp duty is an ‘upfront cost’, meaning that you need to have the funds available rather than adding the amount to your home loan. Check with your mortgage broker for specific details.

Two pieces of good news if you’re considering purchasing a house and land package, like one of Rawson Homes quality options:

You pay stamp duty only on the value of the land
Stamp duty is significantly less when buying land rather than an already complete property. That can constitute a major saving, especially for someone making their first move onto the property ladder.
You can apply to defer your stamp duty payment for up to 12 months if you're buying off the plan and will live in the home. Payment is due 12 months after you sign the agreement, or when the property is completed and handed over, whichever comes first.

A worked example: house and land

Say you're a first home buyer and you've found a package with a $400,000 block and a $500,000 build, so $900,000 all up. If you bought a finished house for $900,000, you'd be in the concession range and paying some duty. But with a house and land package, duty is only charged on the value of the land, not the build. That's $400,000 of vacant land, which sits inside the first home buyer concession range for land ($350,000 to $450,000), so you'd pay a reduced amount. Find a block under $350,000 and you'd pay nothing at all.

Is there a discount for first home buyers? Can stamp duty be free in NSW?

If you’re asking yourself ‘How do I avoid stamp duty in NSW?’ or ‘Is stamp duty ever free in NSW?’, you’ll be pleased to hear that, if you are a first home buyer, you’re eligible for reduced stamp duty through a scheme called the First Home Buyers Assistance Scheme (FHBAS).

If your home costs up to $800,000, you’re eligible for a full duty exemption. According to Revenue NSW, first home buyers purchasing a home for $800,000 or less (or vacant land for $350,000 or less) pay no stamp duty at all.

If your chosen home costs more than $800,000 but less than $1 million, you get a concession on the duty (for vacant land, the concession range is $350,000 to $450,000). These thresholds have applied since 1 July 2023, so if you've seen $650,000 quoted anywhere, that's the old rule.

To be eligible for the First Home Buyers Assistance Scheme, you need to be an Australian citizen or permanent resident. You can be buying an existing home, a newly built home or vacant land on which you intend to build a home.

You must move into the home within 12 months of purchase and live there for at least 12 months continuously. The scheme is not available for holiday homes or properties that include a business.

If your first home will cost between $800,000 and $1 million, you can calculate how much stamp duty you will pay, as well as how much the First Home Buyers Assistance Scheme will save you by using a stamp duty calculator - we recommend the NSW Government First Home Buyers Revenue calculator.

Of course, the concession runs out at $1 million. That's one advantage of building: the duty is worked out on the land, and a block of land is a lot easier to keep under the threshold than a finished house.

Is the FHBAS different to the First Home Owner Grant?

If you buy a property for your first home that’s newly-built, in addition to the exemptions or concessions offered through the First Home Buyers Assistance Scheme, you are also eligible for the First Home Owners Grant (FHOG), which offers $10,000 towards the cost of a newly built home.

It can be for a house, apartment, townhouse or unit for which the land and building is worth less than $750,000, according to Revenue NSW. The grant is just one of the many benefits of house and land packages.

Can I pay an annual property tax instead of stamp duty?

That option closed in 2023. For a few months that year, first home buyers could opt into a scheme called First Home Buyer Choice and pay a smaller annual property tax instead of stamp duty upfront. Revenue NSW closed it to new purchases from 1 July 2023. First home buyers now pay stamp duty upfront, or have it reduced or waived under the FHBAS. We've kept our article about annual property tax in NSW as background.

So that’s our wrap up of stamp duty (or ‘transfer duty’) in NSW. If you’re interested in taking advantage of the stamp duty advantages of building a new home, our team of friendly consultants are happy to help. Just call 1300 223 345 or contact us by email.

Frequently asked questions

Do first home buyers pay stamp duty in NSW in 2026?

Not always. Under the First Home Buyers Assistance Scheme, a first home buyer pays no duty on a new or existing home priced up to $800,000, and a reduced amount between $800,000 and $1 million. For vacant land, the exemption runs to $350,000 and the concession to $450,000. You need to be an Australian citizen or permanent resident, move in within 12 months and live there for 12 continuous months.

Do you pay stamp duty on a house and land package in NSW?

Yes, but only on the land. Revenue NSW charges duty on the value of the land, not the build. Because the land is a fraction of the total, the duty is much smaller than on a finished house at the same price, and a first home buyer with a block under $350,000 pays none.

Can I defer stamp duty when buying off the plan in NSW?

If you're buying a home off the plan and you'll live in it as your main residence, you can apply to Revenue NSW to defer payment for up to 12 months after you sign the agreement, or until the property is completed and handed over, whichever comes first. The deferral is for homes you'll live in, so check the Revenue NSW off the plan page for the full conditions.