The Victorian Government has announced a new temporary off-the-plan transfer (stamp) duty concession for off-the-plan contracts signed from 21 October 2024.
While the existing off-the-plan concessions will remain for owner-occupiers or first homebuyers, essentially, that same concession will effectively now be available to investors, corporate entities or trustee purchasers.
Who is Eligible for the Temporary Off-the-Plan Duty Concession?
The new concession will be available to all purchasers, including investors, companies and trusts, effectively meaning that there’s no longer a requirement to be eligible for either the principal place of residence (PPR) duty concession or the first home buyer duty exemption or concession.
To be eligible for the land transfer duty concession, the purchaser need only satisfy the following:
- Property must be in a strata subdivision – it does not apply to house-and-land-packages.
- Sale Contract must be entered into between the period from 21 October 2024 and ending on 20 October 2025 – it does not matter when settlement is scheduled.
Interestingly, the Victorian Government announcement and the information on the State Revenue Office website make no mention of the monetary limits that apply for owner-occupiers and first home buyers. Currently, owner occupiers who are not first home buyers can’t obtain a concession if the property value is more than $550,000. First home buyers can’t access the concessions if the land value of the property purchased is more than $600,000.
Exclusions from the Temporary Off-the-Plan Duty Concession
Contracts that were signed before 21 October 2024 but settle in the 12-month period are not eligible.
The concession also does not apply to foreign purchaser additional duty. That duty is calculated on the dutiable value of the property before any off-the-plan concession is applied. The off-the-plan concession will only apply to the general land transfer duty liability.
Applying for the Temporary Off-the-plan Stamp Duty Concession
As mentioned above, the new concession works similarly to the existing first home buyer or owner occupier off-the-plan concessions, where the dutiable value of the property disregards the construction costs incurred on or after the date of the Contract.
Most off-the-plan contracts have long settlement periods (to account for the time needed for construction). In the unlikely event that you have an eligible contract settling before the legislation is updated, the State Revenue Office has confirmed you will need to pay the pre-21 October 2024 duty amount and then apply for a refund.
How the Temporary Off-the-Plan Duty Concession Works:
By way of example, Sarah and Michael own their principal place of residence in Camberwell and are looking at purchasing an investment unit in Richmond. The development they’re looking at is yet to commence construction and the developer has listed their preferred apartment for $1 million and has advised that $600,000 of that contract price will be spent on constructing the apartment.
Sarah and Michael intend to rent the apartment out following settlement. They sign the Sale Contract on 28 October 2024, and settlement is due on completion, anticipated within 24 months.
Based on this new concession, the dutiable value of the apartment at settlement will be $400,000 (being the Contract Price of $1,000,000 less the construction costs of $600,000).
Take Homes and Watch Outs from an Experienced Property Lawyer
Please note that Legislation to implement this expanded concession is yet to pass but is expected to be introduced shortly.
The varied rules applying to off-the-plan concessions are confusing, so it's best to consult your property lawyer or other professional for clarification.
If you have any queries regarding this new announcement, please get in touch with our Melbourne-based property lawyers for further guidance.
