The Victorian state government has recently introduced several changes to property stamp duty that all homeowners, homebuyers and investors should be aware of.
How you will be affected and even the concessions you might be eligible for, will depend on what type of buyer you are, where you are buying and the value of your property purchase.
Boost for buyers of off-the-plan and new residential properties
The government has instituted stamp duty (also known as land transfer duty) concessions for new residential properties within the city of Melbourne local government area worth up to $1 million.
A 50 per cent concession has been offered for new residential properties in the above areas, for which contracts are entered into on or after July 1, 2021 and on or before June 30, 2022.
A full exemption from stamp duty will be available to buyers of new residential properties, in the same Melbourne local government area, that are unsold for 12 months or more since construction was completed. This exemption applies to contracts entered into on or after May 21, 2021 and or or before June 30, 2022.
The government has also granted a temporary increase in the eligibility threshold for the off-the-plan duty concession to $1 million for all home buyers across Victoria. This concession has been increased from $750,000 and applies for contracts on or after July 1 this year and on or before June 30, 2023.
Changes to first-home buyers concessions
Stamp duty exemptions for buyers purchasing homes under $600,000 and up to $750,000 remain.
The first homeowner grant for people buying or building new homes in the state has been tweaked. The regional boost of $20,000 has been cut in half to match the $10,000 grant applicable in metro areas.
Property transactions above two million dollars
The biggest overhaul in the stamp duty scheme involves measures aimed at developers and property investors paying their ‘fair share’ according to Victorian Treasurer Tim Pallas.
From July 1, buyers will pay a ‘premium’ stamp duty on property transactions of more than $2 million. This means a payable duty of $110,000 plus 6.5 per cent of the value above $2 million.
There will also be a new ‘windfall gains tax’ which the State Revenue Office outlines as: up to 50 per cent [stamp duty] to be applied to planning decisions to rezone land from 1 July 2022. The total value uplift from a rezoning decision will be taxed at 50 per cent for windfalls above $500,000, with the tax phasing in from $100,000.
Danni Hunter, Victorian Executive Director of the Property Council of Australia opposed the changes.
“Victorian families will pay more to buy a house that suits their needs,” she said.
“Victorians pay more than 50 per cent of the government’s tax revenue through property, and with massive hikes on land tax, stamp duty, and investment in new projects, these taxes are anything but fair,” Ms Hunter said.
“Victorian businesses will pay more in the form of increased land tax and costs on businesses through their office space or warehouses. This, in turn, will flow through to the cost of products and services for every Victorian.”
Changes to land tax
There are also significant changes to land tax. The general threshold for land tax will increase from $250,000 to $300,000 and for ‘high value’ landholdings there will also be rises:
- for taxable landholdings exceeding $1.8 million — the land tax rate will rise by 0.25 percentage points, and
- for taxable landholdings exceeding $3 million — the land tax rate will rise by 0.30 percentage points.
The vacant residential land tax exemption for new developments will be extended to apply for up to two tax years.
Navigating the changes
The stamp duty changes in Victoria are significant and may have potential implications for you depending on whether you are an investor, seller or buyer.
If you would like any property advice from our team, please contact us today.