Article by Davina Deluao
In the State 2021-2022 Budget, the Victorian Government announced that there will be a temporary increase to the eligibility threshold for the off-the-plan stamp duty concession. For all buyers of new and off-the-plan property in Victoria, this means that as of 1 July 2021 the price threshold for eligible properties has been increased from $550k to $1 million.
Although it is a temporary measure, in place until 30 June 2023, the financial assistance will benefit even more potential owners looking to purchase off-the-plan properties and provide a much-needed boost to the apartment market, which has been hit hard by the COVID-19 pandemic. If you’re in the market to purchase your own brand new, off-the-plan apartment or townhome, in this article, we will unpack the details of the off-the-plan stamp duty concession and how it could benefit you.
A property that has been purchased before any construction works have begun, is considered to be off-the-plan. Off-the-plan house and land packages, residential apartments, or unit complexes, are all eligible to receive an off-the-plan concession, depending on the commencement of their contract.
The off-the-plan stamp duty concession effectively reduces the dutiable value of the entire property, meaning the buyer pays less stamp duty when they purchase the property. The ‘dutiable value’ of the property is determined by taking away the building or refurbishment costs from the total contract price. If construction is due to start after the specified contract date, owners will only need to pay stamp duty for the land value.
Thus for off-the-plan properties eligible for this concession, stamp duty is only paid on the amount of the contract price minus construction cost.
Paige buys an apartment off-the-plan as her future home for $620,000. She signs the contract before any construction has started. The vendor advises Paige that $465,000 of her contract price will be spent on constructing her apartment.
This means that the dutiable value of Paige’s apartment, after applying the off-the-plan concession, is $155,000 ($620,000 - $465,000).
Purchasers are required to be over the age of 18 years old and for the property to be used as the principal place of residence. Therefore, the concession isn’t available for homes that have already been sold or previously occupied. This also includes companies who are wanting to acquire off-the-plan properties.
For off-the-plan contracts that have been entered into between 1 July 2021 to 30 June 2023, the temporary increase in the eligibility threshold for the off-the-plan stamp duty concession is able to be applied. By saving on stamp duty costs, interested buyers will now be able to choose from a wider selection of houses and direct their funds towards their homeownership goals.
To find out more details about the conditions for the off-the-plan stamp duty concession and for further explanation regarding the different measures, visit the Victorian State Revenue Office website.
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