The Victorian Government 2020-21 State Budget included an announcement of stamp duty waivers of up to 50% on transfers of residential property in Victoria with a dutiable value of up to $1 million. The waivers apply to contracts entered into between 25 November 2020 and 30 June 2021.
The State Revenue Office (SRO) has recently published further details concerning the duty waivers, including the eligibility requirements.
The duty waiver is available on the general rate of duty otherwise payable where the following requirements are satisfied:
- Property requirement: The relevant property must be a new or existing residential property or vacant land that is classified as residential use development land in the Australian Valuation Property Classification Code (AVPCC). The property type will be assessed at the time of the transfer.
- Dutiable value requirement: The dutiable value of the property cannot exceed $1 million. If the property is purchased off-the-plan (‘OTP’), the dutiable value will be the value after any available OTP duty concession is applied (see our further comments below).
- Contract date requirement: The relevant purchase contract must be entered into between 25 November 2020 and 30 June 2021. However, settlement can occur after 30 June 2021.
- Adequate consideration requirement: The transfer must be a bona fide sale and purchase transaction under which adequate consideration is payable. As such, gifts or other transactions which do not involve consideration will not be entitled to the waiver.
Importantly, the duty waiver is available to all types of purchasers, including home buyers and investors, and is not limited to one purchase.
The duty waiver is also available to foreign purchasers. However, the waiver will not apply to the foreign purchaser additional duty component of the land transfer duty calculation.
The duty waiver will be applied to the duty otherwise payable after all eligible concessions such as the first home buyer duty concession, the principal place of residence concession and the OTP concession are taken into account. The rate of the duty waiver is as follows:
|Property type||Rate of duty waiver|
|New residential premises||50%|
|Existing residential premises||25%|
Off-the-plan property purchases
In relation to OTP purchases, the waiver may be available even if the relevant contract price exceeds $1 million, provided the dutiable value of the property after applying any available OTP duty concession does not exceed $1 million. The OTP duty concession is only available to certain home buyers and is subject to the following thresholds:
- First home buyers – the dutiable value after applying the OTP concession cannot exceed $750,000.
- Other home buyers – the dutiable value after applying the OTP concession cannot exceed $550,000.
Example of how the waiver applies to OTP purchases
David, who is an Australian citizen and an eligible first home buyer, enters into a contract on 15 December 2020 to buy a new townhouse off-the-plan as his principal place of residence for $1,200,000.
The contract is signed before any construction works have commenced and the vendor will use the fixed percentage method to calculate the OTP dutiable value.
Duty payable without any concessions: $66,000
Duty otherwise payable after applying the OTP concession: $13,868
Duty payable after applying 50% duty waiver: $6,934
Total savings: $59,066
When does the duty waiver apply from?
The duty waiver applies to contracts entered into between 25 November 2020 and 30 June 2021, even if settlement occurs after 30 June 2021.
The SRO will apply the waiver automatically if all eligibility requirements are met.
What are the next steps?
Please contact your Pitcher Partners representative if you have any queries regarding stamp duty waivers or any other matter.