Victorian Government Announces Stamp Duty Concessions For Off-The-Plan Homes

Homebuyers in Victoria will save tens of thousands of dollars in stamp duty when purchasing apartments, townhouses, and units bought in the next 12 months, according to a state government proposal to boost housing development.

On October 21, Premier Jacinta Allan announced the stamp duty concession for off-the-plan homes. This policy takes immediate effect and applies to all homebuyers.

Interest rate hikes have slowed down the real estate market over the past year, especially for new projects. The stamp duty reduction policy is expected to help developers quickly initiate construction and facilitate homebuyers.

“Victorians now have more opportunities to choose suitable homes.”

Before the announcement, First home buyers did not have to pay stamp duty on new or existing properties valued at $600,000 or less, with reduced rates available for properties up to $750,000.

The stamp duty concession also applies to non-first-time homebuyers purchasing new or existing properties valued at up to $550,000.

The government said under the new policy, the amount of stamp duty would be calculated based on the value of the land prior to construction, not the total value of the finished property. For example, for a $620,000 apartment, the stamp duty would drop to $4,000—a savings of $28,000.

Treasurer Tim Pallas said this policy would cost the government about $55 million over the next 12 months. However, it is seen as a short-term intervention to warm up the market during this difficult period.

He expects material costs and interest rates to “modestly” decline over the next year. Since the state’s tax policy is a major revenue source accounting for one-third of the total, “stamp duty brings in AU$8 billion annually.”

To qualify for the concession, apartments, townhouses, and units must be in a strata subdivision.

House and land packages or other dwellings that are not part of a strata subdivision are not eligible.

A parliamentary inquiry last year found stamp duty “inefficient and inequitable” but difficult to abolish completely. The investigation called for national reforms on stamp duty to “better address its negative impacts on housing affordability for Australians.”

This view is shared by Jonathan O’Brien of Yimby Melbourne, who supports the Victorian government’s policy but calls for federal intervention.

“This is the time for the Albanese Government to take action and support Victoria in completely abolishing stamp duty, in favor of a broad-based land tax.”

The Property Council and the Urban Development Institute of Australia also supported the announcement, calling it a “good start to a big step forward.”

On Sunday, the government announced a plan to seize planning control in 50 central Melbourne areas near public transport, including wealthy Liberal-held districts like Brighton, Hawthorn, and Malvern.

Source: The Guardian, 2024. Victoria rolls out stamp duty concessions for off-the-plan homes in bid to boost housing development.

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