Land Transfer (Stamp) Duty in Victoria For Building A New Home.

The Basics of Land Transfer Duty in Victoria
Landconnect — 08 March 2020

You cannot buy a property without hearing something about Land Transfer Duty (formally referred to as Stamp Duty). Land Transfer Duty can be one of the most significant upfront costs associated with buying a property, so it's imperative to familiarise yourself with the ins and outs. This article will give you everything you need to know about Land Transfer Duty in Victoria so that you can prepare your budget accordingly and ensure you don’t get caught out by any unexpected costs



What is Land Transfer Duty?


It is the mandatory tax the government applies to property purchases. The amount payable is subject to varying calculations that are influenced by the state or territory you plan to purchase in.


In Victoria, it's calculated on the "dutiable value" of your property. Dutiable value is the price you paid for the property, or it's market value, whichever is greater, this also includes any GST payable. However, it's important to note that many factors are considered when calculating Stamp Duty. In a later section, we'll explore some of the critical factors and any exemptions that might apply to you! 



Land Transfer Duty on New Builds In Victoria?


One of the benefits, when buying a house and land package or building a new home on a vacant lot of land, is stamp duty will only be paid on the value of a vacant lot of land and not on the building component. This is important to note as it could end up saving you thousands of dollars! 


What Factors Go Into Calculating Land Transfer Duty? 




Other than the location of the property and its dutiable value, several other factors determine the cost of stamp duty. Some of the key factors that go into determining the amount of Land Transfer Duty you will be liable for are as follows: 

 

· If you are an Australian resident or a foreign buyer. 

· If you are a first home buyer. 

· Is the property going to be your primary residence or an investment property? 

· If you are buying land or building. 

· Concessions or exemptions i.e., for first homebuyers or pensioners. 

 

The above will impact how much you will need to pay to the state revenue office. 

 

Available Concessions, Reductions, and Exemptions




As of publication, there are multiple concessions, reductions, and exemptions available, which can be found on the state revenue offices website.  The more common ones which may apply to those looking to purchase a house and land package or build a new home are as follows. 

 

Pensioner duty exemption


If you are an eligible pensioner, you may be able to claim an exemption (once-only) or concession from stamp duty when you buy a property you plan to be your principal place of residence.


Follow this link for further information 


 https://www.sro.vic.gov.au/calculators/pensioner-exemption-or-concession-calculator

 

Off-the-plan concessions


Buying-off-the-plan is when you sign a contract to purchase a dwelling that is yet to be constructed.  Buying off-the-plan may make you eligible for a concession to check your eligibility you can review the requirements at the below link: 


https://www.sro.vic.gov.au/offtheplan

 
First Home Buyer exemption, concessions or reductions


If you are purchasing your first home, you may seek to see if you are eligible for an exemption or concession from paying duty provided that you entered your contract of sale after July 1st, 2017. You can find more information on key requirements here: 

 

https://www.sro.vic.gov.au/fhbduty


Principal place of residence concession


If you intend to live in the property you’ve purchased for a continuous period of 12 months, then you may be entitled to a concession. To see if this applies to you, please follow this link


https://www.sro.vic.gov.au/pprdutyconcession

 

Make sure to check for information relevant to the state or territory you plan to buy in. The links provided in this article will help you gain an understanding of any requirements, exemptions, and concessions that you might apply to you.


Land Transfer Duty must be paid 30days after settlement, so it must factor into your budget early in the process to avoid any nasty financial setbacks!


Calculate your potential stamp duty 


Follow this link to calculate any upfront costs you might be required to pay! 


Upfront Cost Calculator