Transfer Duty NSW First Home Buyers: FHBAS Exemption, FHOG Grant, and What You Actually Save
Transfer duty — still widely called stamp duty — is the largest upfront transaction cost in any NSW property purchase. For first home buyers, there are two state-government schemes that can eliminate or significantly reduce that cost. Understanding exactly which properties qualify, what the eligibility conditions are, and how the two schemes interact is essential before you make an offer.
Transfer Duty in NSW: What It Costs Without an Exemption
Transfer duty in NSW is calculated on a progressive marginal rate scale, similar in structure to income tax brackets. The current rates for 2025–2026:
| Property Value | Duty Payable |
|---|---|
| Up to $17,000 | 1.25% ($20 minimum) |
| $17,001–$37,000 | $212 + 1.5% of amount over $17,000 |
| $37,001–$99,000 | $512 + 1.75% of amount over $37,000 |
| $99,001–$372,000 | $1,597 + 3.5% of amount over $99,000 |
| $372,001–$1,240,000 | $11,152 + 4.5% of amount over $372,000 |
| $1,240,001–$3,721,000 | $50,212 + 5.5% of amount over $1,240,000 |
| Over $3,721,000 | $186,667 + 7% of amount over $3,721,000 |
On a $750,000 property, standard duty is approximately $28,852. On an $850,000 property, it is approximately $32,662. These are significant cash outflows on top of the deposit.
The First Home Buyer Assistance Scheme (FHBAS)
The FHBAS is the primary state mechanism for reducing or eliminating transfer duty for eligible first home buyers. Thresholds were significantly expanded on 1 July 2023 and remain in place for 2026.
Full exemption: Properties where the dutiable value is $800,000 or less — zero duty payable.
Concessional rate: Properties where the dutiable value is between $800,001 and $999,999. Duty is calculated using a tapering formula:
Concessional duty = Standard duty × (Property value − $800,000) ÷ $200,000
Example for an $850,000 property: $32,662 × ($50,000 ÷ $200,000) = $8,165.50. Not zero, but substantially less than the $32,662 that would apply without the concession.
At $1,000,000, the concession disappears entirely — full standard duty applies.
Vacant land: For first home buyers purchasing land to build their own home, a full exemption applies where land value is $350,000 or less. Concessional rates apply up to $450,000. Transactions from 1 May 2025 onward have additional provisions that allow a full exemption with no price cap on qualifying vacant land — confirm the current position with Revenue NSW or your conveyancer for any land purchase.
FHBAS Eligibility: The Conditions That Matter
The scheme applies to individuals only — not companies or trusts. At least one purchaser must be an Australian citizen or permanent resident. All purchasers must be at least 18 years old.
The residency requirement is non-negotiable: you must move into the property within 12 months of settlement and live there continuously for at least 12 months as your principal place of residence. If you fail to meet this condition, Revenue NSW requires you to repay the exempted duty with interest and potential penalties.
Neither you nor your spouse or de facto partner can have previously owned or co-owned residential property anywhere in Australia. If your partner owns a property in Queensland and you are buying in NSW under your name only, you are still ineligible.
The scheme does not distinguish between new and established homes — both qualify for the exemption or concession, provided the price thresholds are met.
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The First Home Owner Grant (FHOG): $10,000 for New Homes
The FHOG is a separate, stackable scheme. It provides a $10,000 cash grant on top of any FHBAS duty relief. Critically, the FHOG is restricted to new homes only — established properties are permanently excluded.
New home purchase: The total purchase price must not exceed $600,000.
House and land package (building contract): The combined value of the land and the comprehensive building contract must not exceed $750,000.
Substantially renovated home: Must meet the $600,000 price cap, and the previous structure must have been predominantly removed or replaced, with the property never previously occupied after renovation.
A new home in this context means the first time the dwelling has been sold or occupied as a place of residence. An apartment in a brand-new development qualifies; a two-year-old house that has been lived in does not.
The eligibility conditions for the FHOG mirror the FHBAS — Australian citizen or permanent resident, no previous property ownership, occupancy requirement. Applications are generally processed through your lender if you have a mortgage, or directly through Revenue NSW.
Stacking Both Schemes
For a new home under $600,000, a first home buyer can receive both the FHBAS full duty exemption and the $10,000 FHOG grant simultaneously. For a house and land package under $750,000, the FHOG applies alongside a full or concessional FHBAS exemption depending on the land value.
A worked example from the research: A first home buyer purchases a house and land package in Western Sydney — $400,000 for the land, $350,000 building contract, total value $750,000. Transfer duty is calculated only on the land value at exchange (not the total house-and-land value), since duty attaches to the value of the asset at the time the contract is signed. At $400,000, the land sits in the concessional FHBAS range — duty significantly reduced. The building contract attracts zero duty. The $10,000 FHOG is payable because total value is under the $750,000 cap.
For an established home under $800,000 acquired using the federal First Home Guarantee (5% deposit, LMI waived): the buyer pays zero transfer duty and zero LMI, requiring only the deposit, conveyancing costs, and inspection fees at settlement. A $750,000 purchase can be achieved with approximately $40,000 in total cash.
The Abolished Property Tax: What It Was and Why It No Longer Exists
From January 2023 to June 2023, NSW offered first home buyers a choice: pay upfront stamp duty, or opt into an annual property tax instead. The annual property tax was calculated at $400 plus 0.3% of unimproved land value for owner-occupiers.
This option was abolished from 1 July 2023 following a change in state government. It no longer exists for new purchases. Buyers who opted into the annual property tax before the cutoff date continue to pay it, but no new buyer can elect this option.
There is a substantial amount of outdated content online still describing this choice as available. It is not. Any article or forum post suggesting you can "avoid stamp duty by paying a property tax instead" is describing a repealed scheme.
If you previously applied for the First Home Buyer Choice scheme and are now purchasing a different property, you are not eligible to reuse the scheme. The FHBAS exemption is the only available duty relief for new purchases in 2026.
How to Apply for the FHBAS
Your conveyancer or solicitor manages the FHBAS application. The key document is form ODA 066B — the First Home Buyers Assistance Scheme Application — which must be submitted to Revenue NSW along with a Purchaser/Transferee Declaration and certified identity documentation.
This application must be processed and the duty stamped before settlement can complete. NSW Land Registry Services will not register the title transfer until duty clearance is confirmed. Raise this with your conveyancer at the start of the engagement, not two days before settlement.
The New South Wales First Home Buyer Guide includes the complete FHBAS application checklist, a worked transfer duty calculation for your specific purchase price, and the step-by-step exchange-to-settlement timeline so you know exactly when each obligation falls due.
Common Mistakes That Cost Buyers Their Exemption
Renting the property out immediately after settlement. The FHBAS requires continuous owner-occupancy for 12 months from settlement. If you move in and then lease a room through a short-term platform, Revenue NSW's position is that you may be in breach. If you cannot commit to occupying the property, the exemption is not available to you.
Couples where one partner has previously owned property. If your partner owned a unit years ago and sold it, neither of you is eligible for the FHBAS — even if only your name is on the new contract. The scheme explicitly includes spouses and de facto partners in the prior ownership test.
Purchasing above $1,000,000 and expecting a partial concession. The concessional taper ends at exactly $1,000,000. A purchase at $1,000,001 pays full standard duty on the entire amount. The difference between buying at $999,000 and $1,000,001 is approximately $6,400 in additional tax.
Missing the FHOG price caps for new homes. A $620,000 new apartment does not qualify for the FHOG even though it qualifies for a full FHBAS exemption. The two schemes have different price caps. Do not assume qualifying for one means qualifying for the other.
Transfer duty and the FHBAS exemption are where the biggest sums of money move in an NSW first home purchase. Getting this right — both the eligibility check and the application timing — is not something to rely on assumption or internet forums to manage.
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