Stamp duty is a cost associated with buying a property, applying to almost any home purchased. It is also known as a land transfer duty that must be paid depending on the value of your property. The Victorian State Budget has made changes to stamp duty in 2021. Let us have a look at these changes and see how they can affect you.
What are the incentives?
A “Premium” stamp duty:
From July 1st, 2021, the Victorian government will introduce a “premium” stamp duty to property transactions above $2 million. This will apply to contracts entered on the date or thereafter. These properties will have an increased stamp duty rate of 6.5%, an increase of 1% from the current 5.5% that has been applied to house transactions over $960,000.
For example, if you purchase a property for $2.1 million on or after July 1st, 2021, the stamp duty payable will be approximately $136,500. This is calculated using the new increased rate of 6.5%. Therefore, it is apparent these costs will need to be considered and factored in when securing a property.
Temporary increase in threshold:
In addition, the government has temporarily increased the threshold for off-the-plan duty concessions to $1 million. Buying off-the-plan means purchasing property prior to any building construction starting or finishing, and the concession applies by having the buyer pay duty only on the dutiable value of the property. The dutiable value is the highest price that has been paid for your property including GST. Therefore, the dutiable value for off-the-plan will be the purchase price minus the construction costs, reducing the amount of duty you pay. To be eligible; contracts must begin on or after 1 July 2021 and end on or before 30 June 2023.
A Temporary Stamp duty:
The Victorian government will also offer temporary stamp duty concessions to new residential properties (located within the City of Melbourne) with a dutiable value up to $1 million. Listed below are what is offered for potential buyers:
- A concession of 50% will be applicable for new residential properties. To secure this, contracts must begin on or after 1 July 2021 and end on or before 30 June 2022.
- An exemption will also be available for new properties that for the last 12 months or more, remained unsold since construction concluded. To guarantee this exemption, contracts must begin on or after 21 May 2021 and end on or before 30 June 2022.
W Legal Group can help!
At W Legal Group, we pride ourselves in assisting you through your property journey, please do not hesitate to call or email us with any questions.
