Understanding Stamp Duty in Victoria

High taxes and levies are huge barriers when buying properties in Victoria. The state has some of the highest stamp duty rates in the country.

While you can easily access the online calculator to estimate the amount you might need to pay, we at Red Door Conveyancing have decided to answer some of the most common queries and frequently asked questions in Victoria conveyancing.

What is a Stamp Duty?

Stamp Duty is the tax the state government charges when you purchase or are given land. It is more commonly known as land transfer duty in Victoria conveyancing. 

The dutiable value of your property determines the amount you would need to pay, which is either the price you paid for the land or its market value. You would still need to pay this tax even if you’ve been gifted the property, acquired it through a trust or bought it at a significant discount. 

However, your stamp duty might be reduced if you are eligible for any discount.

How to Calculate Stamp Duty in Victoria

As a potential homeowner, you need to know how much Stamp Duty you need to pay. The State Revenue Office has set out the following Stamp Duty rates for properties purchased after 01 July 2021.

You can calculate your Stamp Duty using the online calculator. When calculating Stamp Duty, you need to account for the property value, whether it’s a primary residence or an investment, and if you are a first-time buyer.

If you’re using a conveyancer, their services should include estimating the Stamp Duty and concessions, and determining all the government fees and charges associated with purchasing. 

Stamp Duty Exemptions in Victoria

Your intention with the new property can impact the amount you would need to pay for Stamp Duty, if any. The following may be eligible for discounts or concessions: 

• First-time buyers
• Primary residence
• Pensioners
• Purchasing off-the-plan 

First-time Buyers

For a first-time buyer with property values under certain thresholds, the amount may be reduced or may not be needed to be paid at all. Under this exemption –

• Properties with less than $600,000 value will not incur Stamp Duty 
• Properties between $600,001 and $750,000 will be eligible for a sliding scale-based concession. 
• Properties over $750,000 value receive no exemption. 

This concession is available to Australian citizens  or permanent residents who are at least 18 years of age. The property must be the primary residence for at least 12 months, commencing within the first year of settlement or completion of construction.

The owner should also not have owned any properties prior to 01 July 2000, or lived in a home they held for more than 6 months after this date. 

This concession can only be used once. 

First-time Buyer Concession Rates

As expected, the closer the value of the property is to the minimum threshold, the smaller the tax payable. You can use this chart from the State Revenue Office to check the concessions you might receive.

Principal Place of Residence (PPR) Stamp Duty Concessions

You may be eligible for a Principal Place of Residence concession if you acquire a property with the intention to live in it. To qualify: 

• The dutiable value of the property must be between $130,000 and $550,000. Properties outside this range will be calculated at general rates. 
• Must intend to use the property as PPR for a continuous 12 month period, within 12 months of settlement. 

If there are multiple homeowners, at least one of them should meet these requirements. 

Off-the-Plan Stamp Duty Concession

Buying a house and land package or a unit may reduce the dutiable value. Consequently you may only be paying a percentage of the stamp duty you would have otherwise. This is because it only factors in the contract price, minus any construction costs incurred.

Generally, the dutiable value following concessions should be under $550,000 or $750,000 for first-home buyers. However, the Victorian Government has set a temporary threshold of $1 million for all home buyers entering contracts between 1 July 2021 and 1 July 2023. 

Off-the-Plan Concession Eligibility

To qualify, the owner must be: 

• Eligible for first-home buyer concession or PPR concession 
• Living in the property for at least 12 months within 12 months of settlement 
• At least 18 years of age, unless the purchaser is the guardian of a person with a disability.

The off-the-plan concession is not available to companies or a trust of a trustee. 

Pensioner Duty Stamp Duty Exemption

The Victorian Government offers Pensioner duty exemptions if you buy a home valued at $330,000 or less. This is a one-off exemption. For homes valued between $330,001 to $750,000, you can get a one-off concession. 

If you are buying a share of a home rather than the whole property, you can also receive a duty exemption or concession. This fractional interest would depend on the value of your share.

Eligibility for Pensioner Duty Exemption and Concession

To be eligible, you must: 

• Be approved for one of the concession cards on the settlement date
• Purchase the property at market value
• Intend to live in the home as your PPR.

Stamp Duty for Foreign Purchasers

Foreign purchasers of property, such as non-Australian citizens and non-permanent residents, need to pay an additional duty of up to 8% on top of land transfer duty. This includes New Zealand citizens with special-category visas. 

Paying Stamp Duty in Victoria

Stamp Duty must be paid at settlement. At Red Door Conveyancing, we’ll guide you through the entire process of buying and selling properties with as little stress as possible. Contact us today.