You don’t need to remind first home buyers; buying property in Australia requires an enormous amount of earning and saving. However, on top of the sale price, many buyers don’t factor in all the additional costs that come with the purchase. The most significant of these costs is usually stamp duty, potentially cutting tens of thousands away from your property budget.
You don’t need to remind first home buyers; buying property in Australia requires an enormous amount of earning and saving.
However, on top of the sale price, many buyers don’t factor in all the additional costs that come with the purchase. The most significant of these costs is usually stamp duty, potentially cutting tens of thousands away from your property budget.
To help get you better prepared for your next property purchase, here’s a comprehensive guide to stamp duty in Victoria.
What is stamp duty?
Stamp duty, or land transfer duty, is a mandatory tax to be paid when purchasing property in Victoria. Stamp duty is a one-off lump sum paid to the state government, and is required for the purchase of any form of property, including houses, apartments, commercial buildings and land.
When is stamp duty due in Victoria?
When the transaction or sale of the property is completed, you are obliged to pay land transfer duty. If you do not pay the stamp duty within 30 days of settlement, you will have to pay fines with interest.
How do I calculate stamp duty in Victoria?
The cost of stamp duty differs for every buyer, with the date of purchase and value of the property will determining the ultimate cost of the fee.
The following are the general stamp duty rates applicable to owner-occupied properties in Victoria:
A stamp duty concession or exemption may be available for the purchase of a home worth under $550,000 where the buyer intends to use the property as their primary place of residence.
In order to be eligible for this exemption, the buyer must live in the property for a minimum of 12 months after settlement.
First Home Buyers
There are stamp duty exemptions and concessions available for first-time homebuyers in Victoria.
Under this scheme, when you buy a new home or an existing property up to the value of $600,000, you may be eligible for a complete stamp duty exemption.
Additionally, first home buyers of properties valued between $600,000 and $750,000 may be eligible to receive a reduction in the cost of stamp duty. This reduction is calculated on a sliding scale, which you estimate using Elephant Advisory’s Stamp Duty Calculator.
Who is eligible for the first home buyer duty concession?
You must not have previously acquired an exemption or concession under this scheme; it is only available once.
You must be over 18 years of age at the time of settlement or completion of construction unless you petition to have this requirement waived.
At least one of the candidates must be a citizen or permanent resident of Australia.
You must live in the house as your primary residence for a minimum of 12 months, beginning within the first year of settlement or completion of construction.
Prior to July 1, 2000, you had not owned a residential property in Australia.
Concession Card Holders and Pensioners
Concession card holders and pensioners may be eligible for a one-off stamp duty exemption for the purchase of homes valued under $750,000. To receive this benefit, the must intend to live in the property as your primary place of residence.
If you’re buying property off-the-plan, you also may be eligible for a stamp duty concession.
Eligibility for these benefits depends on several factors including the date of your purchase, the value of the property and the intended owner of the property.
Land or property that is inherited is generally not subject to stamp duty or capital gains tax. Under these circumstances, we recommend you first speak to your accountant or mortgage broker who will help you better understand the legal requirements surrounding your individual situation.
Transferring Land Among Family Members
If you’re legally married or in a domestic partnership, you don’t have to pay stamp duty on a property when you transfer it to your spouse. However, for this to apply, the property should be your principal place of residence. Additionally, this also can apply to the transfer of property as a gift to immediate relatives, including children and siblings.
How do I apply for a stamp duty concession?
All stamp duty applications must be done through written forms from the State Revenue Office.
We recommend that you first consult a legal representative before filling out these forms to ensure your eligibility for these schemes.
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Elephant Advisory is an accounting and mortgage broking firm based in Melbourne, with a successful history of helping our clients achieve their goals. With a little help from us, you'll be prepared to make the right decisions for your business or property journey, avoiding many of the potential mistakes along the way.