Stamp duty slashed for off-the-plan apartments, units and townhouses
Stamp duty will be cut for all apartments, units and townhouses bought off-the-plan as the Allan government moves to make it easier to buy and build homes. Here is how the scheme will work.
Victoria
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Stamp duty will be slashed for all apartments, units and townhouses bought off-the-plan under a bold push by the state government to turbocharge the housing market.
The tax concessions will be announced on Monday as part of a week-long government roll out of new measures to fix the state’s housing crisis.
The move will see stamp duty reduced for thousands of buyers, incentivising Victorians to enter the market and stripping back a major barrier for developers.
Stamp duty concessions are currently available for first home buyers and owner-occupiers when they buy off-the-plan, but the offer is capped.
The new stimulus, however, will remove the cap and will open the concession to anyone buying an apartment, unit or townhouse off-the-plan.
The amount of stamp duty paid will be calculated based on the cost of the land prior to construction, not the total price of the finished property.
In one example, a Victorian who buys an off-the-plan apartment for $620,000 – with the land valued at $77,500 – would pay just $4000 in stamp duty, rather than $32,000 – a $28,000 reduction.
Victorians who have bought off-the-plan apartments, units or townhouses which are currently under construction will also be eligible for slashed stamp duty.
But it will depend on how much of the construction has been completed.
The expansion will only be available for one year, meaning the concessions will be scaled back again on October 21 next year.
Premier Jacinta Allan said the extra relief for aspiring home buyers would lead to “more homes for young people and families”.
It comes after months of calls from the property industry to remove stamp duty for off-the-plan sales, with experts warning the restrictive charge was deterring investment, delaying development and slowing down sales.
The move, which has been described as a win by key property figures, is also expected to increase the number of rentals.
Property Council of Australia Victorian executive director Cath Evans called the extra concessions a “big step in the right direction”.
She said apartment and unit developers had been “hit hard in recent years” with apartment commencements in Melbourne declining to less than 4000 a year, according to analysis of the build-to-sell market.
“Off-the-plan concessions for all purchasers will help bring back new buyers to this important part of the housing market,” she said.
“Increasing off-the-plan purchases has been proven to support the feasibility of new housing projects, which in turn unlocks further development.”
Urban Development Institute of Australia Victorian CEO Linda Allison also welcomed the expansion, saying the state’s property taxes have been “a barrier to home ownership and homebuilding”.
She said tax reform was the “key to reducing the cost of housing” and boosting market confidence.
“These expanded concessions are a good start,” she said.
She pointed to a recent report by Urbis, commissioned by the UDIA, which showed that the Victorian government has collected almost $1 billion less in stamp duty revenue over the last decade, primarily due to high taxes.
“The Urbis study demonstrated that taxes are putting a handbrake on new apartment developments,” she said.
How the plan will work
Who qualifies for the concessions?
Anyone who buys an apartment, unit or townhouse off the plan. An eligible apartment, unit or townhouse is one that is in a strata subdivision. For example, the properties share a driveway or a shared hallway.
Who doesn’t?
House and land packages or other dwellings that are not part of a strata subdivision are not eligible for the extended concession.
I’m a first homebuyer looking to buy a house, will I still be able to use current stamp duty exemptions and concessions?
Yes, stamp duty exemptions and concessions for first homebuyers for any properties will remain in place. They include exemptions for homes valued up to $600,000 and concessions for homes valued up to $750,000.
How long will the scheme last?
The expanded concessions will be in place for one year, ending on October 21, 2025.
When does it start?
Monday, October 21, 2024.
Do developments currently under construction qualify?
Yes, but stamp duty will be calculated based on the amount of construction that has already been completed.
Why is the government introducing expanded concessions?
Property industry experts have advised that the current settings have slowed sales and stopped developments getting underway. With a concession reducing upfront costs for more buyers, developers can expect more pre-sale success, assisting them to meet finance requirements faster and start the construction of new homes sooner.
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