In brief
In what has been an unprecedented year, the Victorian Government released the State Budget for 2020-21 ('Budget') on 24 November 2020 with a stated objective of "putting people first".
To stimulate the property market and assist with housing affordability, the Budget includes a temporary waiver on stamp duty for eligible residential properties purchased in Victoria.
More generally, the Budget handed down primarily focuses upon reviving the Victorian economy over the next four years, with close to $49 billion to assist in repairing the devastating impacts of the COVID-19 pandemic.
What you need to know
Property transactions involving residential properties in Victoria with a dutiable value of up to $1 million will be eligible for the following land transfer (stamp) duty waivers:
- 50 percent for a transfer of new residential properties; and
- 25 percent for a transfer of established residential properties.
For standard residential properties, the dutiable value is the contract price. For off-the-plan sales, the dutiable value is the contract price less the off-the-plan concession.
For example, for the purchase of a new residential property where the dutiable value is $700,000.00, the stamp duty would usually be $37,070.00 and is reduced instead to $18,535.00.
The waiver applies to contracts entered into or after 25 November 2020 and before 1 July 2021. It is important to note that the State Revenue Office has warned that it is an offence to alter a contract to qualify for the waiver if the contract was signed prior to 25 November 2020.
The stamp duty waiver does not extend to the foreign purchaser additional duty component.
Conclusion
The stamp duty waiver increases the threshold of the dutiable value of residential properties to $1 million, from the previous $750,000.00, affording more home buyers (and not just first home buyers) with the opportunity to take advantage of the savings on stamp duty.
Purchasers should seek legal advice before and after signing contracts of sale and seek advice in relation to how these changes will affect their transactions.
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
