Stamp duty slashed up to 50% for Victorian homebuyers

Posted: 25 November 2020 1:49 pm
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Homebuyers in Victoria stand to save up to $27,500 with a new stamp duty waiver – but who is eligible, and when does the opportunity to cash in expire?

The Victorian state budget has just been announced and homebuyers are set to save a small fortune, with a stamp duty discount of up to 50% now available on purchases of residential property in Victoria.

This is going to make the prospect of buying your first home or moving into another home far more realistic for thousands of Victorians – but there are a number of criteria and timelines to be mindful of.

The waiver of up to 50% applies to any residential property worth up to $1 million, on a contract entered into on/after 25 November 2020 and before 1 July 2021. This values the potential savings at up to $27,500.

Importantly, it is available to all homebuyers, not just first home buyers.

Currently, it's only first-time buyers who have had access to stamp duty discounts, with a full exemption on homes valued at up to $600,000, and a discount for homes priced between $600,000 and $750,000.

Danni Hunter, CEO of the Urban Developers Institute of Victoria (UDIA), said the news will "get more people into their new homes and guarantee Victoria's liveability for generations to come".

"It's a shot in the arm for the housing industry," Hunter said.

"The government has put its money where its mouth is and announced a once-in-a-generation housing sector stimulus, which will deliver jobs, investment and economic activity as we build our recovery from COVID-19."

How much can you save with the stamp duty discount?

A full 50% stamp duty discount will apply in Victoria for all buyers of newly built homes, valued at up to $1 million. For those buying existing homes, a 25% stamp duty discount will apply.

The exemption will be available for those who enter a purchase contract between 25 November 2020 and 30 June 2021.

The potential savings on stamp duty for Victorian homebuyers are substantial:

50% discount on new properties

Property purchase priceRegular stamp duty for first home buyersNew stamp duty for first home buyersPotential savingsRegular stamp duty – other buyersNew stamp duty – other buyersPotential savings
$400,000$0$0$0$8,870$4,435$4,435
$600,000$0$0$0$31,070$15,535$15,535
$800,000$43,070$21,535$21,535$43,070$21,535$21,535
$1,000,000$55,000$27,500$27,500$55,000$27,500$27,500
Note: Above calculations do not include transfer fee or registration fees.

25% discount on established/second-hand properties:

Property purchase priceRegular stamp duty for first home buyersNew stamp duty for first home buyersPotential savingsRegular stamp duty – other buyersNew stamp duty – other buyersPotential savings
$400,000$0$0$0$8,870$6,653$2,217
$600,000$0$0$0$31,070$23,303$7,767
$800,000$43,070$32,302$10,768$43,070$32,302$10,768
$1,000,000$55,000$41,250$13,750$55,000$41,250$13,750
Note: Above calculations do not include transfer fee or registration fees.

The stamp duty discounts form part of a greater investment in housing across the state, including the flagship $6 billion Big Housing Build package investment in social and affordable housing.

The government also announced a $500 million fund to contribute to the purchase price of a home in exchange for equity interest; a 50% land tax discount for investors who invest in build-to-rent properties, to run from 2022 until 2040; and an extension of the $20,000 First Home Owners Grant for regional Victorians who purchase new properties.

Proposed changes to NSW stamp duty

In other news of stamp duty reform, an annual property levy could be introduced to replace stamp duty for NSW property buyers, under proposed tax changes in the state government's 2020/21 budget.

The NSW government is considering a "once in a generation change" that would give homebuyers the choice to pay either stamp duty and land tax (where applicable for investors), or a new, smaller annual property tax.

NSW Treasurer Dominic Perrottet said that instead of having to find up to tens of thousands of dollars upfront to pay for stamp duty when purchasing a property, they could elect to pay an annual property levy.

"Stamp duty is a relic from a bygone era when you picked one career, started a family, bought a home and basically settled in for life. We have a model that we think works and this is something we will consult on through until March," Perrottet said.

Perrottet added that those who have already paid stamp duty on an existing property would not be subject to an annual property tax. The proposal invites public consultation until March 2021.

With these waivers factored in alongside record-low interest rates, Aussie CEO James Symond said now is a great time for both "next home buyers and those looking to enter the property market" to take action.

"The power is in their hands when it comes to getting a good home loan deal amid low mortgage rates and government initiatives, and we would like to see even more support measures for homebuyers continue," Symond said.

"Many lenders are offering a range of competitive incentives and low rates for new customers, and with the stamp duty cut, Victorian buyers particularly are in a great position to buy a property."

Read the latest property news on Finder and if you're ready to buy, check how much you might be able to borrow. You can also compare home loan rates across the market.

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