Changes to Stamp Duty Law in Victoria
Changes to Stamp Duty Law in Victoria.
From 1 July 2017, changes will take effect to the benefits that are available to purchasers of property in Victoria.
First Home Buyers
In addition to the payment of the purchase price, most sales of land in Victoria currently require that purchasers have a minimum deposit of ten percent, plus sufficient funds to make payment of Stamp Duty. Given that the average city-wide median house price is set to soar above $800,000 later this year (meaning that the average deposit required is $80,000 and average Stamp Duty payable is $43,000) these requirements can end up forming a significant barrier to first home buyers being able to enter into the property market.
Any exemptions, or reductions to these requirements can be of great assistance, particularly to first home buyers.
New changes introduced in the recent Victorian State Budget have been put in place to try to alleviate some of the current housing affordability crisis, particularly for first home buyers.
From 1 July 2017, these changes are as follows:
There will be full exemption from Stamp Duty to be paid by eligible first home buyers for purchases up to $600,000.
There will be a concession available to eligible first home buyers for purchases between $600,000 and $750,000. These will be calculated on a sliding scale. For example if a purchase was $605,000, the Stamp Duty payable will be $1,046 (rather than the normal $31,370).
A further essential change has also been put into place for purchasers in the new home market. The Stamp Duty payable for these purchases will be calculated after taking into account deductions relating to the costs of construction post-contract.
Page BreakOff The Plan Buyers
Currently there are substantial Stamp Duty savings available to purchasers in Victoria who purchase a property “off the plan”. These apply to purchasers who enter into a contract prior to the construction of a property. The Stamp Duty payable is calculated on the improved value of the land, the non-deductible costs and the completed construction or refurbishment including GST as at the contract date.
This Stamp Duty concession will however be limited after 1 July 2017. It will no longer be available for properties purchased as an investment, and will be only available for properties to be used by the purchaser as their principal place of residence.
The new criteria to be used by the State Revenue Office is as follows:
The concession is available where the dutiable value of the property is less than $550,000. Importantly, the calculation of dutiable value allows for deduction from the contract price of an amount that represents the value of construction to be undertaken after the date of the contract and prior to settlement. The fixed percentage method of calculation of post-contract construction cost allocates cost as follows:
single dwelling – construction cost 45% – land component 55%
multi lot – construction cost 60% – land component 40%
high rise – construction cost 75% – land component 25%
Off The Plan First Home Buyer
The home must have a dutiable value (after the concession is applied) of $750,000 or less;
All purchasers and their partners must meet the first home owners eligibility criteria; and
The property must be used by the purchaser as their principal place of residence for 12 months following taking possession of the property.
Off The Plan Other buyers (excluding investors)
The home must have a dutiable value (after the concession is applied) of $550,000 or less;
The purchaser must meet all other criteria for the Principal Place of Residence concession, and
The property must be used by the purchaser as their principal place of residence for 12 months following taking possession of the property.
Where to from here?
Should you have any queries in relation to these changes and how they may affect you, please call HDME Lawyers on (03) 9692 6500 to discuss with one of our Lawyers.
HDME LAWYERS PTY LTD Level 1, 600 St Kilda Road Melbourne Victoria Australia 3004 PO Box 6746 Melbourne Victoria Australia 3004 Tel 03 9692 6500 Fax 03 9510 6488 www.hdmelawyers.com.au
