This year’s unprecedented COVID-19-induced decline in real estate sales in Victoria led to severe drops in stamp duty revenue forecasted in the 2019-20 and 2020-21 financial years.
So, earlier this year, we asked the question: ‘Is it finally time to scrap stamp duty?’
Despite falling short of abolishing stamp duty entirely, the Victorian Government agreed something had to be done and introduced a number of tax relief measures in the 2020-2021 State Budget aimed at stimulating the property market in the wake of COVID-19.
For those looking to purchase property over the next 6 months, this includes a stamp duty waiver of up to 50% on the purchase of residential properties in Victoria. That’s an enticing prospect!
What you need to know about the Victorian stamp duty waiver
The full 50% stamp duty waiver applies to new residential properties or off-the-plan homes valued up to $1 million. Existing residential properties valued up to $1 million will be eligible for a 25% waiver.
This means a potential saving of up to $27,500 for a buyer of a new home and $13,700 for a buyer of an existing home.
When does the Victorian stamp duty waiver apply?
The waiver is only temporary, applying to contracts entered into on or after 25 November 2020 and before 1 July 2021.
Why did the Victorian Government introduce the stamp duty waiver?
The measure is intended to entice people back into the Victorian property market, which has certainly taken a hit during the COVID-19 pandemic as a result of lockdown restrictions and the uncertain economy.
There is also broader policy objective for the waiver which, together with a number of other tax relief measures and subsidies, forms part of the Victorian Government’s holistic ‘Big Housing Build’ budget package – a $6 billion investment package which the government hopes will increase the supply of housing and alleviate affordability issues in the Victorian property market.
Are first home buyers still eligible for other stamp duty concessions?
First home buyers purchasing a property between $600,000 to $750,000 – who are entitled to the stamp duty concession but not the full exemption – should be able to combine this with the new stamp duty waiver up until 30 June 2021 (when the waiver ends).
For those looking to buy a home worth more than $750,000 but less than $1million, the new residential property value threshold of up to $1 million for the waiver marks a significant increase compared to the first home buyer duty concession threshold of $600,000 to $750,000. This means more people looking to purchase a new or existing home in Victoria will be eligible for the waiver.
Although, the new $1 million threshold does not apply on a sliding scale, which means any purchase of a residential property valued over the $1 million threshold will be ineligible for the waiver.
Additional tax relief measures and subsidies offered by the Victorian Government
Other notable tax relief measures and subsidies include Land Tax Discounts, the First Home Owners Grant and Stamp Duty Concessions.
Land Tax Discounts
From the 2022 land tax year, a 50% land tax discount will apply to eligible build-to-rent developments, including an exemption from the absentee owner surcharge, until 1 January 2040. This is intended to reinvigorate the build-to-rent sector and generate new investment into these projects.
First Home Owners Grant
The government has extended the $20,000 First Home Owner Grant for people buying or building a new home in regional Victoria, which is to apply to contracts of sale entered up until 30 June 2021.
Stamp Duty Concessions
The government will bring forward the 50% stamp duty concession for commercial and industrial properties in regional Victoria to contracts entered into on or after 1 January 2021.
Keen to find out more?
As you can see from the above summary, there is a lot of opportunity for those looking to purchase property this coming year.
Please get in touch with the BlueRock Law team if you would like to find out more about the stamp duty waiver or any other tax relief measures released in the State Budget. We’d be happy to talk through your options and help you make the right decision about your next property purchase.