IT’S THE END OF (DUTY DISCOUNTS) AS WE KNOW IT …*
When purchasing a new home, it is easy to focus on saving for the deposit and overlook the upfront costs which need to be factored into your budget including the big one, land transfer (stamp) duty.
In Victoria, there are currently several stamp duty reductions available for eligible purchasers. Some will no longer be available beyond the end of this financial year, so if you are close to securing a property purchase, it may be in your interests to sign on the dotted line this side of 30 June.
Stamp duty waiver
In late 2020, the Victorian Government introduced a stamp duty waiver of up to 50% for new residential properties, 25% for existing residential properties and 25% for vacant residential land with a purchase price of up to $1 million.
The waivers have not been extended under the recent budget announcements and will come to an end on 30 June 2021. However, eligible purchasers can still take advantage of the waiver incentives provided they have entered into a contract on or after 25 November 2020 and before 1 July 2021, and provided they meet the remaining eligibility requirements.
What is great about the incentive is that the waiver can be applied in conjunction with other concessions available, including the first home buyer duty concession, principal place of residence concession, off the plan concession and pensioner concession. Interestingly, the waiver is not limited to one purchase either.
What stamp duty benefits are included in the budget this year?
The Victorian Government is incentivising the purchase of new residential properties in the City of Melbourne with a dutiable value up to $1 million, by providing a 50% concession for contracts entered into on or after 1 July 2021 and on or before 30 June 2022. In addition to this concession, there will be a full exemption for new residential properties which have remained unsold for 12 months or more since the completion of construction, with exemptions applying for contracts entered into on or after 21 May 2021 and on or before 30 June 2022.
The budget also includes an extension of the current off the plan concessions until 30 June 2023 with the cap increasing from $750,000 up to $1 million.
At the other end of the spectrum, there will be a new premium stamp duty which will be payable on property purchases with a dutiable value above $2 million for contracts entered into on or after 1 July 2021 and on or before 30 June 2023. This will see the increase of stamp duty payable to $110,000 plus 6.5% of the dutiable value in excess of $2 million.
Are there more discounts available if I am buying my first home?
There have been specific stamp duty concessions available to first home buyers since July 2017 and these are due to continue. Purchasing a residential home under $600,000 is fully exempt from any stamp duty and for purchases up to $750,000 eligible buyers may receive a partial concession.
In addition to the above incentives, the First Home Owner Grant (FHOG) will remain for purchases of new homes valued up to $750,000. Currently the FHOG is $10,000 for eligible purchases within metro Melbourne and $20,000 for regional Victoria. From 1 July 2021 the regional grant will be reduced to $10,000.
What if I am struggling to save for a full home deposit?
The Victorian Homebuyer Fund (VHF) was established to assist eligible buyers who do not have a 20% deposit available but wish to purchase an established or newly built home. The VHF will contribute to the purchase price in exchange for equity in the property.
Are there any other incentives?
There are also concessions available for eligible purchasers of regional commercial, industrial and extractive industrial property.
*It’s The End of the World As We Know It (And I Feel Fine) is a song by R.E.M. released on their 1987 album Document