Stamp Duty Changes for Off-the-Plan Buyers

FINANCE
16-Apr-2018

 

When buying property, whether it’s a first home, new residence for a growing family or an investment, there’s one expense we must always keep in mind – stamp duty.

Stamp Duty is a tax paid on specific assets, including homes. It’s a requirement of state and territory governments that varies by region. This article is focused on stamp duty in Victoria.

From July of last year (2017), the Victorian government changed the off-the-plan concession to be a principal place of residence off-the-plan concession.

This change limits access to the concession for buyers. There is a minimum value threshold for concession eligibility – and you must occupy the home as your principal place of residence


 

Off-the-plan Overview

The concession to stamp duty for off-the-plan buying relates to land and building purchases as well as refurbishments of buildings that are already constructed.

Off-the-plan value is calculated by deducting construction or refurbishing costs that add to the contract price and occur on or after the date of signing. If construction hasn’t began, the stamp duty cost will generally only relate to land value.

Example:

You plan to buy an off-the-plan property in a residential tower. It will be your primary place of residence when it is completed. The price at the date of signing is $500,000. The developer informs you that $350,000 of that price is spent on construction. The off-the-duty concession makes the dutiable value of the apartment $150,000 – saving you quite a large sum of money.

How the Change Affects Buyers

The change is simple; the concession only applies to buyers who will live in the new property as a primary residence. This means that buyers of investment properties and vacation homes can no longer access the stamp duty concession.

Rules for Buyers

Currently, in Victoria, the principal place of residence – or PPR – status requires the intent to live in a new home for a continuous period of 12 months within 12 months of settlement.

If you’re thinking of buying off-the-plan, our team of dedicated brokers and property professionals can help you maximise the benefits of your purchase. Contact Melcorp Finance today on 03 8616 8388. 

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