Victoria’s temporary off-the-plan duty concession: Labor’s stamp duty overhaul

The stamp duty concession will be available to all off-the-plan purchases. Under the concession, the purchaser will be able to deduct the construction costs incurred when determining the dutiable value of the purchaser’s property. All purchasers including investors, companies and trusts, are eligible for the concession, so there is no requirement to be eligible for either the principal place of residence duty concession, or the first home buyer duty exemption or concession.

Lucy has just signed a contract to buy an apartment off the plan in Melbourne for $790,000, before any construction has begun. She is advised that $400,000 of the contract price will be spent on the construction element of her home. Normally, she would pay $42,470 in stamp duty, however under the plan, she will not pay anything, as she is able to deduct the construction costs when calculating the dutiable value of the property ($790,000-$400,000) and she is under the dutiable threshold.

Xavier has signed a contract to buy a townhouse off the plan in Geelong for $1.2 million, before construction has begun. He is advised that $750,000 of the contract price will be spent on the construction element of his home. Normally, he would pay $66,000 in stamp duty, however, he can deduct the construction costs, meaning his dutiable value is $450,000. As he signed is contract after 17 October and he is eligible for the concession, he will pay $22,070 in stamp duty, saving him $43,930. However, Xavier is a Spanish citizen and will have to pay foreign purchaser additional duty on his townhouse. This will be calculated on the full $1.2 million purchase price.

The Victorian Government has specified that this concession is for apartments and townhouses, rather than freestanding homes.

No, the concession does not apply to house-and-land packages. The government requires the property to be in a strata subdivision, meaning that there is common property, such as a shared driveway.

No, the contract must have been signed within the eligibility period, being on or after 21 October 2024 for a period of 12 months.

No price cap for the concession has been outlined in the Victorian Government’s plans.

Eligibility is based entirely on the date the contract of sale is signed. This is irrespective of whether settlement occurs before or after the end of the 12-month window.

No income limit for the concession has been outlined in the Victorian Government’s plans.

Yes, however foreign purchaser additional duty will still be calculated on the dutiable value of the property before any concession has been applied.

The new concession will be available for dwellings where the contract is entered into from 21 October 2024, for 12 months.

The scheme will last for 12 months, meaning eligibility is based on the date the contract is entered into. It does not matter whether settlement occurs before or after the end of the 12-month window.

Yes, the existing off-the-plan concession for owner-occupiers and first home buyers will continue to apply.