In the first half of 2023, thousands of first home buyers in New South Wales did something almost no property purchaser in the state's history had been able to do: they chose their own tax. At settlement, one signature meant a single, often five-figure bill due before they got the keys. The other signature meant a smaller bill every year for as long as they owned the home — a fixed charge plus a small fraction of the land's value, paid annually like a council rate. It was called First Home Buyer Choice, and for the first time in generations, buying a first home in NSW did not automatically mean paying stamp duty upfront. Then, on 1 July 2023, the choice closed. Everyone who bought a first home in NSW after that date was handed back the same single form their parents had signed.
That closure is the subject of this article, and it sits inside a much older argument. Economists across the political spectrum agree that stamp duty — a lump-sum tax charged every time a property changes hands — is one of the most damaging taxes a government can levy, because it punishes the act of moving rather than the value of what is owned. A retired couple who would free up a large family home by downsizing, a tradesman who would cut his commute by moving closer to a new job, a growing family that has outgrown a two-bedroom unit: stamp duty puts a tax bill in front of every one of them, and a share of each group decides the move isn't worth it. First Home Buyer Choice was NSW's only ever legislated attempt to open a door out of that system. The Minns government closed it after five and a half months, and it has not proposed another.
What the government did
The idea did not start with the Coalition, and it did not end with Labor's repeal — but the legislated version was built and dismantled by NSW's two most recent governments in turn. In November 2020, then-Treasurer Dominic Perrottet used that year's Budget speech to act on the central recommendation of his own commissioned review, the NSW Review of Federal Financial Relations chaired by David Thodey, which had reported months earlier that the state should "replace transfer duty with a broad-based land tax" as a more efficient and equitable base (NSW Treasury, Review of Federal Financial Relations, final report, Nov-2020). Perrottet's original proposal was ambitious: an opt-in property tax open to all buyers, designed to grow over time into the broad land tax the Thodey review had recommended. By the time it was legislated, in the Property Tax (First Home Buyer Choice) Act 2022, the scheme had been narrowed to first home buyers only, purchasing homes up to $1.5 million or vacant land up to $800,000. It commenced on 16 January 2023. Eligible buyers who chose the property tax paid a fixed $400 plus 0.3 per cent of unimproved land value each year if they lived in the home, rather than transfer duty at settlement (Revenue NSW, First Home Buyer Choice scheme guide, 2023).
Labor opposed the scheme in opposition, campaigning against what then-Shadow Treasurer Daniel Mookhey called a "forever tax" that would attach to a property permanently, regardless of who owned it later. Chris Minns' government, elected in March 2023, moved quickly. The First Home Buyer Legislation Amendment Act 2023 (No 4 of 2023) closed First Home Buyer Choice to new entrants from 1 July 2023; buyers who had exchanged contracts by 30 June 2023 retained the right to opt in at settlement. In its place, from the same date, the government lifted the ordinary stamp duty exemption threshold for first home buyers from $650,000 to $800,000, and the concessional-rate threshold from $800,000 to $1 million (NSW Treasury, 2023-24 Budget; Revenue NSW, First Home Buyer Assistance Scheme). Roughly 5,000 buyers had opted into the property tax in the scheme's five and a half months of operation before it closed; they were grandfathered and continue paying the annual charge on those properties (media reporting of Treasurer Mookhey's statements; Revenue NSW, 2023, approx.).
The strongest case
A narrow scheme for a narrow group, swapped for relief that reaches more of them
Judged only against what First Home Buyer Choice actually was — not the broader land tax it was once meant to grow into — the Minns government's case is genuinely defensible. In five and a half months, roughly 5,000 buyers opted in. Raising the stamp duty exemption and concession thresholds instead reaches a far larger group of first home buyers immediately, with no annual paperwork and no ongoing liability to track. The government's argument that this is "simpler and fairer" for the cohort it targets is not spin; it is a real trade-off between depth and breadth of relief, and NSW chose breadth.
There is also a genuine equity and design problem the Coalition scheme never fully resolved. Because the property tax attached to the land rather than the buyer, it would have followed the property to every future owner, indefinitely — encumbering resale value in ways that were hard for a first-time buyer to price and, some economists argued, unfair to bind on people who had no say in the original choice. And because participation was voluntary rather than universal, the scheme could never deliver the revenue stability or efficiency gains a genuine broad-based land tax is meant to provide: those depend on the tax applying to (almost) everyone, not to whoever finds it individually attractive at the point of purchase. A partial, opt-in scheme risked becoming neither a clean stamp duty system nor a real land tax — an argument made not only by the government but by land-tax reform advocates themselves, including the Grattan Institute, which has criticised the design choices made on both sides of NSW politics (Grattan Institute, "Stamp duty isn't going anywhere until we can agree on the tax to replace it", secondary source). On revenue predictability, transfer duty is also simply a known, budgeted quantity for a Treasurer managing a tight fiscal position after the pandemic, where an unproven annual property tax was not.
The evidence
The scale of the barrier the Coalition scheme was built to soften is not disputed. Under the current general transfer duty rate scale, buying an established $1 million home in NSW attracts duty of roughly $39,237 — a bill unrelated to income, paid in full before settlement, whether the buyer is a first-timer, a downsizer or a family trading up (Revenue NSW, current transfer duty rate scale, 2026-27, approx.). Housing Australia, the Commonwealth's housing finance agency, estimated in 2021 that transfer duty on residential property supplies around 13 per cent of state and territory tax revenue nationally while being paid by only around 4 per cent of households in any given year — a narrow, lumpy base carried by whoever happens to be moving (Housing Australia, Stamp Duty Reform: Benefits and Challenges, Jul-2021, secondary source, approx.). The Productivity Commission's most recent five-yearly review reached the same conclusion as the Thodey review before it: state and territory governments should "move from stamp duties on residential and commercial properties to a broad-based land tax on the unimproved value of land" (Productivity Commission, Advancing Prosperity, Mar-2023).
The mobility cost is the part a purely fiscal debate tends to leave out. Analysis drawn on by the Productivity Commission estimates that stamp duty deters close to a quarter of would-be downsizers — mostly older owners in homes now too large for them — from moving at all, holding family-sized housing stock out of the market at the exact moment a growing state needs more of it freed up (Productivity Commission analysis, approx., cited in national tax-reform research). None of this is unique to NSW. What is unique to NSW's story is that the state built a live, if narrow, mechanism for winding the tax back — and then closed it, without replacing it with anything that continues the transition. NSW's transfer duty revenue is not shrinking as a result; it is growing. The 2024-25 Half-Yearly Review put transfer duty revenue at $12,589 million for that year, revised down slightly from an earlier $12,981 million budget estimate on softer transaction volumes, but forward estimates still show it climbing to $13,515 million in 2025-26, $13,667 million in 2026-27 and $14,190 million in 2027-28 (NSW Treasury, 2024-25 Half-Yearly Review, Dec-2024).
A tax the state's own commissioned review called inefficient and inequitable is now forecast to raise more money, not less, for a government that has stopped trying to replace it.
The critique
Judged against the narrow question of who benefits from First Home Buyer Choice specifically, Labor's case holds up. Judged against the wider reform Thodey, and the Productivity Commission both recommended, it does not. Raising the stamp duty exemption and concession thresholds is a demand-side subsidy: it lowers the cost of buying below a set price point, but does nothing for the retiree trying to downsize out of a house that is no longer taxed as a "first home", the worker relocating for a new job, or the family upsizing into a larger one — the very transactions economists identify as most damaged by a transfer tax. It also risks partly defeating its own purpose in the way most stamp-duty concessions do: when buyers can spend less on duty, some of that saving tends to get bid into the price they are willing to pay, a well-documented effect of demand-side housing subsidies more generally. The relief is real, but it is narrower and shallower than the mobility problem it is marketed against.
More strikingly, the repeal left NSW with no live reform pathway at all — not even the flawed, opt-in one it dismantled. The Thodey review's core recommendation and the Productivity Commission's repeated national advice sit unactioned on the shelf, while NSW's dependence on transfer duty grows: the same revenue base the state's own review called volatile and inefficient is forecast to rise from $12.6 billion to $14.2 billion across the four years to 2027-28. That is not a coincidence of timing so much as a structural problem — the larger transfer duty revenue becomes, the more painful any transition away from it looks to a Treasurer balancing a Budget, which makes NSW less likely to attempt reform in future, not more. For comparison, the ACT is still legislating its way through a 20-year, government-wide transition from stamp duty to broader land-based rates that began in 2012; independent reviews have found that transition running behind its own schedule too. NSW, by contrast, is not attempting a transition at all — it tried the smallest possible version, for the smallest possible group, and then stopped.
The risk to the future
A state betting its Budget on the tax it once tried to escape
The immediate risk is fiscal. Transfer duty is tied to how many properties change hands and at what price — both of which move with interest rates and consumer confidence, not with the state's spending needs. NSW's own Half-Yearly Review has already had to revise its transfer duty forecasts down once, on softer transaction volumes, even as the multi-year trend points up. A state increasingly reliant on a shrinking pool of transactions to fund growing services is exposed every time the property market cools, exactly the scenario the Thodey review warned against when it urged a broader, steadier base.
The deeper risk is to mobility itself. Every year NSW leaves stamp duty untouched for everyone except a narrow band of first home buyers, it keeps taxing the decisions the state most needs more of: older residents freeing up family homes, workers moving closer to jobs, growing families finding a home that fits. A generation of Sydneysiders now faces the same tax their parents faced, with none of the choice that briefly existed in 2023 — and no announced plan to build a better one. The reform is not merely paused. On the evidence available, it has been abandoned.