VIC stamp duty changes: How to avoid higher homebuying costs
From July, concessions for off-the-plan purchases will increase, but tax on expensive homes will rise.
Yesterday's Victorian state budget is bringing big changes to the state's property taxes and first home owner grants.
Victorians buying "high-value properties" worth over $2 million will pay more land transfer duty (another word for stamp duty) from 1 July 2021. People buying these properties will have to pay a premium rate of 6.5% for every dollar above $2 million.
Land taxes will also increase slightly on taxable landholdings valued at $1.8 million or more. But it's not all higher taxes. Some buyers will actually be able to save on stamp duty through extended concessions.
If you're a first home buyer purchasing an off-the-plan property in Victoria, you'll qualify for a concession if your home is valued at up to $1 million. This comes into effect from 1 July 2021 and lasts until 30 June 2023. The previous threshold for this concession was $750,000. With property prices rising across the state, this change will benefit more off-the-plan purchasers.
There's also a 100% stamp duty concession for purchases of new residential properties in the Melbourne local government area (the CBD and a few surrounding suburbs) valued at up $1 million. But only if the property has been unsold for at least 12 months since completion.
A 50% concession applies for properties valued at $1 million or below that are not eligible for the 100% concession. This is to encourage purchases in the Melbourne CBD, an area heavily affected by the COVID-19 pandemic.
The $20,000 First Home Owner Grant for buyers purchasing or building a new home in regional Victoria will end on 30 June 2021. This means regional buyers may only qualify for the $10,000 grant that applies to the whole state.
"It's only fair that those making large profits return a reasonable proportion to the community – this means more Victorians can have the schools, hospitals and support they need and deserve," said Victorian Treasurer Tim Pallas.
Unsurprisingly, property industry representatives have reacted negatively.
Property Council of Australia Victorian executive director Danni Hunter said "The new stamp duty will hit 50% of homes in 120 suburbs by 2030."
But it's unlikely that Victorian stamp duty thresholds will remain unchanged until 2030, so this is very difficult to predict.
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