Stamp Duty vs Land Tax: What’s the Better Choice

What Is Stamp Duty?

Stamp or transfer duty is a one-off tax you must pay when you purchase property or land in Australia. It’s paid upfront, usually at settlement, and is often one of the largest additional costs when buying a home or investing.

The amount of stamp duty you’ll pay depends on:

• The purchase price or market value of the property
• The state or territory where the property is located
• Whether you’re a first-home buyer, investor, or owner-occupier
• Whether you’re eligible for any concessions or exemptions

Stamp duty can add tens of thousands to your upfront costs, affecting how much you borrow, your deposit size, and your short-term cash flow. That’s why it’s essential to calculate this early in the buying process. Learn more about stamp duty by state in Australia for a complete guide about stamp duty.

Stamp Duty Concessions

Some buyers may qualify for reduced stamp duty or full exemptions, particularly:

• First-home buyers (via First Home Buyer Assistance Scheme or First Home Buyer Choice)
• Buyers of new homes under certain thresholds
• Pensioners or concession card holders in select states

Do you qualify? Contact our team, and we’ll analyse your financial position, property type, and ownership goals to recommend the most cost-effective path.

What Is Land Tax?

Unlike stamp duty, which is a one-time cost, land tax is an ongoing annual tax charged on the unimproved value of land you own. This means it only applies to the land portion, not any buildings or structures.

When Do You Pay Land Tax?

You’ll typically pay land tax if you:

• Own investment properties
• Own commercial or holiday properties
• Hold land in a trust or company structure
• Own multiple properties, excluding your primary residence (in most states)

Each state and territory sets its own thresholds, rates, and exemptions, but in New South Wales, land tax is generally not payable on your principal residence.

NSW Land Tax Rates (2023–2025)

For First Home Buyer Choice (Owner-Occupied Property):

• $400 + 0.3% of land value annually

For Investment or Secondary Properties:

• $1,500 + 1.1% of land value annually (if value exceeds threshold)

Example:
If your land is valued at $750,000, you might pay:

• Owner-occupied: $400 + (0.3% × $750,000) = $2,650/year
• Investment: $1,500 + (1.1% × $750,000) = $9,750/year

Note: Land tax is assessed on total land holdings, not per property, which can significantly increase annual tax liabilities for investors with multiple properties, as land tax is calculated on total landholdings rather than per property.

Do You Pay Land Tax on Your Home?

In most cases, no. Not if it’s your primary place of residence. But if you’re choosing to pay land tax instead of stamp duty (under the NSW First Home Buyer Choice), you will pay annual land tax even on your own home.

Investor Tip: Land tax may be tax-deductible for investment properties, and may be a more tax-effective strategy, especially for short- to medium-term investors.

NSW First Home Buyer Choice Explained (2023–2025)

The NSW government introduced First Home Buyer Choice to reduce the upfront cost burden for new buyers. This policy allows eligible first-home buyers to pay annual land tax instead of upfront stamp duty.

This initiative is designed to help eligible first-home buyers in NSW, particularly in high-demand areas like Sydney, overcome upfront cost barriers and enter the market sooner.

What Is the First Home Buyer Choice?

If you’re buying your first home in NSW, you may now choose to:

• Pay stamp duty upfront (the traditional method), or
• Pay a smaller annual property tax (land tax) for as long as you own and occupy the home

This choice is available for eligible contracts signed from 11 November 2022 to 30 June 2025.

Eligibility Criteria

To qualify, you must:

• Be an individual (not a company or trust)
• Be over 18 years old
• Be an Australian citizen or permanent resident
• Be a first-home buyer
• Sign a contract to purchase a property:
  • Up to $1.5 million (residential home)
  • Or up to $800,000 (vacant land)

You must also move in within 12 months and live in the home for at least 6 months.

Annual Property Tax Rates (2025)

If you move out and rent the property, it becomes an investment and is taxed at the higher investor rate.

For many first-home buyers, especially in high-value areas like Sydney or Wollongong, choosing land tax can:

• Save tens of thousands upfront
• Help you buy sooner by preserving deposit funds
• Increase borrowing power by reducing initial outlay

The wrong choice could add tens of thousands in unnecessary taxes over your ownership period, depending on how long you keep the property.

Pros and Cons of Each Option

Now that you understand how stamp duty and land tax work, let’s compare them.

Your choice will depend on factors like how long you plan to own the property, your financial position, and whether the home is for living in or investing.

Stamp Duty – Pros and Cons

Land Tax – Pros and Cons

At Stryve Finance, we don’t just compare tax options, we look at your whole financial picture:

• Deposit size
• Loan structure
• Cash flow needs
• Future property plans

Book a call and let’s build a buying strategy that fits your goals now and in the years ahead.

How to Choose: Key Considerations

1. You Plan to Own the Property?

This is the most significant deciding factor.

• Land tax could save you money if you plan to sell or upgrade within 7–10 years.
• Stamp duty is usually cheaper in the long run if it’s your forever home or a long-term investment.

Rule of thumb: Stamp duty generally wins if you’ll own the home for more than 15–20 years.

2. What’s Your Current Cash Flow Like?

Stamp duty is a large lump-sum payment upfront, often tens of thousands of dollars. Land tax spreads that cost out year by year, helping you:

• Preserve cash for renovations
• Reduce the loan-to-value ratio (LVR)
• Boost borrowing capacity

Tip: First-home buyers often qualify for better loan terms by choosing land tax, thanks to stronger cash flow positions.

3. Are You an Investor or Owner-Occupier?

If you’re purchasing an investment property, land tax may be:

• Tax-deductible
• More aligned with a shorter holding period
• Easier to structure into cash flow with rental income

However, that deduction doesn’t apply to owner-occupiers, so stamp duty may be a smarter choice long-term, especially if you’re staying put.

4. What’s the Land Value?

Land tax is based on the land value, not the full property value. If the land makes up a large portion of your property’s worth (like vacant land or new developments), your annual land tax bill will be higher, which may change your break-even point.

At Stryve, we calculate the true long-term cost using actual land value assessments from the state.

5. Are You Eligible for the First Home Buyer Choice?

If you don’t qualify (e.g. the property is over $1.5M, or it’s a second home), the choice won’t apply, and you’ll default to the standard stamp duty model.

Check your eligibility or ask us to confirm in minutes.

“If you’re staying in the home long-term, stamp duty is usually cheaper overall. Land tax offers more flexibility if you’ll upgrade, sell, or refinance in under 10 years.” – Stryve Finance Team.

But there’s no one-size-fits-all answer. The best decision depends on your timeline, loan structure, land value, and future property plans.

Make the Smart Move with Stryve

Navigating the choice between stamp duty and land tax is more than just crunching numbers; it’s about aligning your property decision with your financial goals, timeline, and lifestyle. While stamp duty may offer better value for long-term homeowners, land tax can open the door to homeownership sooner and ease cash flow pressures, especially for first-home buyers in NSW.

But this decision doesn’t exist in a vacuum. It affects your borrowing power, repayment strategy, and future property opportunities. That’s why making this call with the whole picture in mind is essential.

At Stryve Finance, we take a holistic approach to property finance. We go beyond rates and repayments to help you understand how tax strategies, government incentives, and loan structuring work together to support your long-term success.

Whether purchasing your first home, expanding your portfolio, or unsure which path is right for you, our team is here to simplify the process and give you clear, tailored advice backed by years of mortgage industry experience without the jargon or sales pressure.

Book your free strategy session today, and let’s turn your property goals into a plan that works.