New Temporary Stamp Duty Concession for Off-the-Plan Properties

The Victorian Government has introduced a significant opportunity for property buyers with its new off-the-plan stamp duty concession. Effective from 21 October 2024 for a 12-month period, this concession aims to stimulate the property market by making off-the-plan purchases more financially accessible. With broader eligibility criteria than previous concessions, the changes bring a fresh approach to home buying and investment in Victoria, particularly for apartments, townhouses, and units within strata subdivisions.

In this blog, we’ll explore how the new stamp duty concession works, who benefits, and what it means for investors and homebuyers alike.

What is the New Off-the-Plan Duty Concession?

The off-the-plan duty concession allows purchasers of properties within strata developments—such as apartments and townhouses—to reduce their stamp duty obligations. Previously, this concession was only available to buyers who qualified for either the principal place of residence duty concession (for properties with a dutiable value up to $550,000) or the first home buyer duty exemption/concession (for properties with a dutiable value up to $750,000).

However, the new changes remove these thresholds and broaden the scope of eligible purchasers. Investors, companies, and trusts can now also take advantage of this concession, offering a more inclusive approach to real estate investment

How Does the Concession Work?

Under the new concession, the dutiable value of an off-the-plan property is determined by deducting construction costs incurred after the contract date from the property’s total contract price. This effectively lowers the dutiable value, meaning that buyers will pay less stamp duty than they otherwise would on a completed property. The concession applies to properties within strata developments, which means the subdivision of land includes common property such as shared driveways, gardens, or recreational areas.

For example, if you purchase an off-the-plan apartment for $800,000, and the developer estimates $200,000 of the construction costs will occur after the contract date, your dutiable value would be $600,000. Stamp duty will be calculated based on this lower value, providing a significant reduction in costs.

Timing of the Concession

The new off-the-plan duty concession applies to contracts entered into from 21 October 2024 and remains valid for 12 months. This means that any contracts signed before this date are not eligible for the concession, but buyers have an entire year to take advantage of the scheme.

It’s important to note that settlement does not need to occur within the 12-month period; as long as the contract is signed within the eligible timeframe, the concession applies. This provides flexibility for buyers and investors who may not be ready to complete their purchases immediately but still want to benefit from the concession.

Key Benefits for Purchasers

This temporary expansion of the off-the-plan concession is a strategic move to boost the Victorian property market by making off-the-plan purchases more attractive to a wider range of buyers. Some of the key benefits include:

1. Broader Eligibility: Unlike the previous concessions that were limited to first home buyers or those purchasing a principal place of residence, this new concession extends to all purchasers, including investors, companies, and trusts. This makes it an appealing option for property investors seeking to expand their portfolios.
2. Lower Upfront Costs: By allowing buyers to deduct post-contract construction costs from the contract price, the concession reduces the dutiable value, leading to lower stamp duty payments. This can result in substantial savings, especially for higher-value properties.
3. Flexible Purchase Timing: While the concession is available for contracts signed between 21 October 2024 and 20 October 2025, there is no requirement for settlement to occur within this period. This gives buyers the freedom to plan their purchases without feeling pressured by the concession’s timeline.
4. Encouraging Strata Developments: The concession specifically applies to strata subdivisions, promoting the development and sale of properties that offer shared amenities and communal living spaces. This can be particularly appealing for buyers looking to invest in growing urban areas or developments that offer modern conveniences.

The new temporary off-the-plan stamp duty concession presents a valuable opportunity for a wide range of purchasers in Victoria. Whether you're a first home buyer, an investor, or part of a company or trust, the expanded eligibility and dutiable value reductions make off-the-plan properties more accessible than ever.

If you're considering purchasing an apartment, townhouse, or unit within a strata development, this 12-month window is an excellent time to take advantage of the savings on offer. For further assistance and to know if you are eligible, contact us on 0391933634 or drop us an email to connect@tomorrowfs.com.au.