Temporary changes to off-the-plan stamp duty concession
Following a recent announcement made by the Victorian state government, legislation will soon be brought into effect for ‘temporary’ off-the-plan stamp duty concession changes. The temporary measures will seemingly scrap existing price caps that apply to the concession, along with residency or first-home buyer requirements.
The current stamp duty concession is for those buying off-the-plan (i.e., the dwelling/unit has not yet been built or it is still under construction when the contract is signed). The concession works by deducting from the sale price the cost spent on construction after the contract was signed and applying the dutiable value to this figure, rather than the full contract price.
For example, Winston enters into a contract to buy an apartment for $1,000,000. At the time of signing the contract, construction has not commenced and the seller indicates that the cost of construction will be $550,000. Where ordinarily Winston would pay stamp duty on the full contract price of $1,000,000, with the off-the-plan concession applying he only pays stamp duty on a dutiable value of $450,000 (being the contract price minus the construction costs).
To be eligible for the current off-the-plan concession, certain price caps must be met and the purchaser must also be eligible for:
– the Principal Place of Residence concession (‘PPR’), meaning they intend to use the property as their home for at least 12 months; or
– the First Home Buyer Duty Exemption or concession.
What’s changing?
As noted above, the temporary changes to the concession aims to set aside any price cap limits under off-the-plan contracts, along with the PPR or first home buyer requirement. This will largely benefit investors, along with those wishing to purchase properties in a trust or corporate entity who would otherwise been ineligible for the off-the-plan concession.
However, these changes will only impact purchasers:
– buying off-the-plan on strata developments – meaning free standing house-and-land packages brought off-the-plan will likely not benefit from the temporary changes; and
– who purchase a dwelling (a residential apartment/unit/townhouse); and
– who enter into a contract signed in the 12-month period starting 21 October 2024 (when the contract ultimately settles does not matter, as long as it is signed in this period).
Author: Josh Curtis
Published: 29 October 2024