Land transaction tax will be changed in Wales, meaning about 80% of house sales will be exempt from paying tax.
Finance Minister Rebecca Evans made the announcement at the Welsh Government daily coronavirus briefing.
It will bring the rate payable for properties valued at between £180,000 and £250,000 to zero from 27 July until the end of March 2021.
Properties selling for less than £180,000 are already exempt from paying the tax.
The change will not apply to second homes or buy-to-let properties, which have to pay an additional 3% in tax on top of the existing rate for their value.
The tax, known as stamp duty in England and Northern Ireland, has already been waived for properties there up to the value of £500,000.
Ms Evans said: “Unlike in England, this new threshold will not apply to the purchase of additional properties such as buy-to-lets or second homes.
“It will support people looking to purchase their first home or those seeking to move up the property ladder. So it will offer more targeted help to those who may be affected by the economic challenges resulting from the pandemic.”
The minister said the new threshold meant no tax would be paid on around 80% of transactions in Wales where the main residential rates apply.
Ms Evans said the decision to cut the tax house buyers pay was “very much a response” to the chancellor’s change to the system in England last week, saying the “porous” nature of the Wales-England border was a motivating factor.
The UK government changes meant Wales had received some additional funding, she explained, some of which was being redirected towards social housing.
“This decision will not only provide support to homebuyers, it will also free up some £30m to invest in a different, even more direct stimulus to the housebuilding industry,” Ms Evans said.
“I am pleased to confirm that this funding will be committed to the construction of modern social homes, supporting jobs and securing a decent place to call home for those who need it”.
Currently, properties sold for between £180,000 and £250,000 pay 3.5% of the value in tax.
As an example, an average selling price of £212,063 in Cardiff means the buyer would pay £1,262.21 in land transaction tax (LTT).
The maximum tax payable at present on a £250,000 property is £2,450.
Forecasts from February by the Office for Budget Responsibility showed the Welsh Government was expected to raise £250m from the tax, although this was before the coronavirus pandemic, so it is now likely to be lower.
Nathan Hardee and his girlfriend have been renting in Cardiff for three years while saving up to buy a house.
They found a house for around £300,000 in the new Plasdwr development to the city’s north-west.
If coronavirus had not come along, they would have moved in by now after finding the house in December.
However, the Welsh Government’s announcement on the land transaction tax holiday has seen a silver lining to the cloud of delay.
It means the couple will now save nearly £2,500 on what they would have had to pay, as they will only be taxed on the portion of the payment which is more than £250,000, rather than everything above £180,000.
Mr Hardee told BBC Wales: “If you haven’t got to save up for stamp duty as well, that could be quite a big, significant difference to people who want to buy.
“We’re due to complete early September at the moment, so today’s announcement has made a massive difference to us. We’ll get an extra £2,450 now.
“When we come to complete on the day, we end up paying less money.
“It was the sort of thing that was needed.”
He thought the tax holiday could help keep buyers in his situation in Wales, saying if there had been a tax break only in England they might have looked at Bristol instead.
In England and Northern Ireland, anyone completing on a main residence costing up to £500,000 between 8 July and 31 March will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.
Chancellor Rishi Sunak said the average stamp duty bill in the two countries would fall by £4,500, with nine out of ten people paying no duty at all.
Scotland has also announced a rise in the threshold for its version of stamp duty, the land and buildings transaction tax, from £145,000 to £250,000.
Although welcoming Ms Evans announcement, Conservative finance spokesman in the Senedd Nick Ramsay said capping the tax holiday at sales of £250,000 would “do very little to kick-start the housing market in Wales or to tempt buyers near the border to buy a property here rather than in England”.
Plaid Cymru’s Rhun ap Iorwerth said he was pleased Welsh ministers did not “cut and paste England’s changes to stamp duty” saying the move “shows the value of being able to tailor taxation policy to Wales’ needs and being able to set different priorities”.