Ah, stamp duty. If you could find a way to reduce the amount you pay – you would, right?
That’s why the new stamp duty changes in Victoria have pricked the ears of so many Victorian homebuyers – with the potential to save tens of thousands of dollars in stamp duty on off-the-plan homes, apartments, townhouses and units.
So, here’s the low-down on the latest new build stamp duty concessions in Victoria – straight from your Finspo experts.
What are the new stamp duty changes in Victoria in 2024?
To sum it up in a sentence: the new stamp duty changes mean that almost anyone can get a stamp duty concession when they buy off-the-plan (provided it’s in a strata subdivision like a townhouse or apartment) with no price cap on the value of the property. Booyah.
Ok, tell me more…
Stamp duty concessions aren’t a new thing in Victoria. They’ve been around for a while (just check out our article on the ultimate guide to first home buyer grants and schemes).
But the difference with this announcement? The Victorian Government is expanding stamp duty concessions for off-the-plan homes, apartments, town-houses and units (AKA strata subdivisions), with stamp duty concessions now available to anyone buying off-the-plan, not just first home buyers (although there are different rules for foreigners).
The stamp duty concession will apply for 12 months, starting from the 21st October 2024 (yep, we’re already under way).
The goal behind the Government’s decision is to boost housing development, supply and demand, and stimulate the construction industry in a time of housing shortages.
But hold up, can we recap: what is stamp duty?
In a nutshell, stamp duty is a tax that state or territory governments charge for certain transactions, usually on the ‘transfer of land’. And it usually makes up a whopping expense for home buyers.
Stamp duty waivers, concessions or exemptions exist to give home buyers a foot into the property market (or in the case of this recent announcement, to stimulate housing development).
While an exemption or waiver often means you pay zero stamp duty, a concession means you score a discount.
What have the stamp duty rules been up until now?
Prior to the recent Government announcement, stamp duty concessions were mainly aimed at first home buyers.
Here’s a run down. Provided they met all the eligibility criteria, first home buyers:
- Did not have to pay stamp duty on new or established properties worth $600,000 or less
- Scored a stamp duty discount on properties between $600,001 – $750,000
Note, these rules are still in place for first home buyers, the recent announcement is simply an expansion.
In the past, stamp duty discounts have also been available for non-first home buyer owner occupiers who bought new or existing homes valued at up to $550,000. The difference with the recent announcement? The value of the home is uncapped.
The details: New stamp duty concessions in Victoria (2024)
Who’s eligible?
Unlike some previous stamp duty concessions, the recent announcement is available to almost anyone purchasing off-the-plan in a strata subdivision.
This includes:
- First home buyers
- Upgraders
- Downgraders
- Investors
- Companies
- Joint borrowers
- Trusts
However, the concession does not apply to foreigners (they still have to pay the foreign purchaser additional duty).
The new concession will be available for off-the-plan purchases of dwellings (including apartments and townhouses) within strata subdivisions. Unlike previous stamp duty concessions and waivers, there are no limits to the cost of the property.
But wait, what does ‘off-the-plan in a strata subdivision mean’?
This clause can’t be overlooked, so let’s clear it up.
‘Off-the-plan’ essentially means buying a home before or during any building or work has started – so you’ll be getting a brand spanking new home.
When we talk about ‘strata subdivision’, it refers to a building or property that’s been divided. Basically, there must be common property in the subdivision, like a shared driveway or lift. This includes townhouses, apartments and units.
Therefore, this stamp duty concession is not available to typical house and land packages that aren’t part of a strata subdivision.
When does the stamp duty concession apply?
The Government has announced the stamp duty concession will run from 21 October 2024, for a period of 12 months. In terms of timing, eligibility is based on when you sign the contract of sale (it doesn’t matter when you settle).
For example, if you signed the contract of sale before the 12-month window, and settled within the 12-month window, you won’t be eligible for the stamp duty concession. But if you sign the contract of sale in the 12-month window, and settle outside of the window, you may be eligible.
How much is the stamp duty concession?
The way the Government has structured the concession is by waiving any stamp duty payable on the cost of construction.
Therefore, stamp duty only needs to be paid based on the cost of the land prior to construction (not the total price of the finished property).
So, say if you’re purchasing a townhouse off-the-plan worth $800,000, but the costs of construction make up $300,000 of the price. You will only be paying stamp duty on $500,000 (that is, 800,000 – 300,000 = $500,000).
But what if construction is already underway? Well, it doesn’t necessarily mean you can’t get the stamp duty concession – the concession just might be adjusted byto the amount of construction costs still left to do on or after the contract date..
Here’s another example
Let’s say Alex buys an off-the-plan townhouse for $900,000 in December 2024. This is his second property purchase, he’s upgrading his existing home which was a small apartment. During the sale, the vendor confirmed that $350,000 of the price is allocated to construction costs. Since Alex qualifies for the new stamp duty concession, he’ll likely only need to pay stamp duty on the land component of $550,000 ($900,000 − $350,000).
However, if at the time of purchase, construction on the townhouse was 40% complete, Alex would only be able to deduct 60% of the construction costs, or $210,000 ($350,000 × 60%). In this case, the dutiable value would be $690,000 ($900,000 − $210,000).
Either way, the concession means Alex could save thousands on stamp duty. Booyah.
“Important to note that these are general examples provided to demonstrate the possible savings available. It’s actually your conveyancer who will confirm 100% what stamp duty concessions will apply to the property purchase you are considering. Finspo always recommends you consult with a conveyancer before signing a contract to purchase property.”
Still got questions? Take a squiz
Will the new stamp duty concession increase my borrowing power?
Well, it depends on a number of factors, like the property you’re looking at, how much you have saved for a deposit, and how much a lender is willing to lend you. But to give you a straight answer – it could potentially increase your purchasingborrowing power if you use the money that otherwise would have gone to stamp duty, and put it into your deposit. That means you could potentially buy a property you couldn’t have otherwise afforded.
As a first home buyer, does the new stamp duty concession mean I’ll be competing with investors?
It’s hard to know until we see the new concession fully play out. While yes, you could be competing with investors, it’s important to remember that the new concession is aimed at boosting construction and supply – so with any luck, it could create more opportunities to enter the property market.
Can I still get the first home buyer stamp duty waiver on an established property now that this new concession is in place?
Yes! The new stamp duty concession is in addition toas well as – not instead of. So, if you find a new or established property, you could still be eligible for the first home buyer stamp duty waiver or discount. A mortgage broker can help work out which incentive might be better for your situation.
Where can you apply for the temporary off-the-plan concession?
When you’ve found an off-the-plan property you’re interested in, confirming eligibility and applying for a stamp duty concession is usually done through your conveyancer or solicitor (or online through the Digital Duties Form).
At Finspo, we’re a team of brokers (but not the suit-and-tie-wearing kind) ready to help you explore your options.
If you’re interested in buying a property off-the-plan inside the concession window, we can get the ball rolling with your home loan and point you in the right direction.
Meeting with a Finspo home loan expert is as easy as 1, 2, 3.
- Book a chat with a friendly Finspo expert (online, phew!)
- Tell us about yourself and provide any additional info
- We’ll do the heavy lifting and present you with some loan options and a recommendation
