Last Thursday, Victorian Treasurer Tim Pallas announced the Budget plans for 2021/22. The property sector in particular will be significantly impacted as a result of the announcements made.

The table below outlines the changes announced and proposed start date.

Tax Change Effective on
Stamp Duty Premium stamp duty introduced
Premium stamp duty will be introduced to property transactions above $2mil – $110,000 of duty plus 6.5% of dutiable value in excess of $2mil. This percentage is fixed and not adjusted annually depending on inflation.

Previously, the highest general rate was 5.5% for transactions with dutiable value in excess of $960,000.

1 July 2021
Temporary Concessions
For contracts entered into 1 July 2021 to 30 June 2022, and do not qualify for a Tax Exemption, the Victorian Government will extend the 50% stamp duty discount on new residential properties in the City of Melbourne Local Government area. 1 July 2021 to 30 June 2022
For contracts entered into from 1 July 2021 and ending 30 June 2023, there will be an increase in the eligibility threshold for the off-the-plan duty concession to $1 million for all home buyers. 1 July 2021 and ending 30 June 2023
Temporary Exemptions
For contracts entered into 21 May 2021 and ending on 30 June 2022, a full exemption on stamp duty for new residential properties worth up to $1million and have remained unsold for 12 months or more since completion of construction i.e. the stamp duty is waived. 21 May 2021 to 30 June 2022
The 25% Stamp Duty waiver will cease for existing or vacant residential land 1 July 2021
Land Tax Increased percentage
· 0.25 per cent for taxable landholdings exceeding $1.8 mil and no more than $3 mil; AND

· 0.30 per cent for taxable land holdings in excess of $3mil.

2022 land tax year
Will not apply to private gender exclusive clubs 2022 land tax years
For contracts entered into from 1 July 2021 to 30 June 2023 the land tax threshold will increase from $250,000 to $300,000. The Land Tax Threshold for land held on trust still is $25,000. 1 July 2022 to 30 June 2023
Vacant Land tax
Exemption for new developments are temporarily extended for up to two tax years. 2022 land tax year
New tax: Windfall Gains Tax · introduced for properties where value has boosted by a council rezoning.

· Will only apply where the property's value is boosted by more than $100,000 with a 50% tax on windfalls above $500,000.

· Victorian Government expects to raise $2.7 billion from the suite of measures.

· Victorian Government expects a $124 million increase over four years.

· Not part of Budget Bill but will be in a separate legislation.

1 July 2022

The penalty unit has also increased by 10%, making the new unit $181.74 per unit. This change will take effect on 1 July 2021.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.