The move does not apply to additional properties including buy-to-let or second home purchases, unlike in England and Northern Ireland, but will end on 31 March.
The rates for higher rate residential or non-residential transactions are unchanged.
Around 80 per cent of homebuyers liable to the main rates of land transaction tax will not pay any tax with an average reduction of £2,450 per transaction, the government said.
It noted that the lower value reflected the nature of the housing market in Wales, where the average house price of £162,000 is considerably lower than the £248,000 in England.
First time buyers typically pay £139,000 in Wales, and £208,000 in England.
The move coincides with the full opening up of the housing market in Wales, which will also take place on 27 July, with viewings of occupied properties allowed to recommence.
A further £30m to support the construction of new social housing was also announced.
Finance Minister Rebecca Evans (pictured) said: “This tax holiday will help first time buyers as well as those selling to move on, but we are taking a different direction to support jobs and house building in Wales.
“While eliminating taxes for those that need extra help, the tax holiday rate also reduces the tax paid on more expensive properties to help the wider housing market.
“Under these changes more than three quarters of homebuyers will pay no tax at all, an increase of 20 per cent under our current measures,” she added.