This was published 1 year ago
Stamp duty abolished for commercial property in ‘landmark’ Victorian tax reform
By Lachlan Abbott
Commercial and industrial property buyers will soon no longer pay stamp duty after the Andrews government announced Tuesday’s budget would abolish the lump-sum payment in favour of an annual property tax in coming years.
The government says the significant tax reform would add $50 billion to the Victorian economy through enhanced business growth.
The changes do not impact residential property, despite economists warning stamp duty on housing was an inefficient tax that unfairly punished young home buyers.
The new annual tax will be set at a flat 1 per cent of a commercial property’s unimproved land value.
Properties bought from mid-2024 will transition to the system, with the annual property tax to be payable 10 years after the transaction.
The 10-year transition period from the middle of 2024 will give first buyers of a commercial property the option to pay either stamp duty upfront, or the same amount stretched out over a decade.
Once a property moves to an annual tax, stamp duty can never again apply. Property owners who bought before the 2024-25 financial year will remain under the current stamp duty system.
Treasurer Tim Pallas said the government had listened to business and industry calls for the shift to a broad-based tax, which will remove significant upfront costs when buying a property.
“These landmark changes will enable businesses to be more dynamic and agile, and to grow and employ more workers,” he said in a statement.
Victorian Chamber of Commerce and Industry chief executive Paul Guerra welcomed the change.
“This is exactly the type of progressive tax reform that is required to free up stamp duty charges, which will accelerate building upgrades, stimulate investment in commercial property and free up more capital,” he said.
Premier Daniel Andrews last week said he was “unconvinced” replacing stamp duty for home buyers with an opt-in land tax – like the former NSW Coalition government scheme which will be abolished by NSW Labor Premier Chris Minns – would be effective.
The government says it will consult businesses in the coming months to finalise the transition plan, which will be announced in further detail later this year.
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