What homebuyers need to know about Victoria's temporary off-plan duty relief

The Victorian Government has announced a temporary stamp duty concession for off-plan flats, units and townhouses for 12 months from 21 October 2024.

With the Victorian government aiming to build 800,000 homes over the next decade, this temporary relief will reduce costs, speed up development and allow home buyers to purchase off-plan homes at a more affordable price.

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Previously, only first home buyers and other owners were eligible for stamp duty concessions for off-plan properties. The concessions were also related to the price limit.

Not only is stamp duty relief now available to all buyers, including investors, but price restrictions have been removed.

Here's what you need to know about the stamp duty overhaul for seekers.

what is stamp duty

Stamp duty, officially known as land transfer duty, is a one-time payment to transfer title to the buyer's name. It serves as a transaction tax payable at the time of purchase.

The temporary duty relief will last until October 21, 2025. Image: realestate.com.au/buy

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How will the temporary relief work?

The temporary fee concession will be available for all off-plan flats, units and townhouses. This does not apply to detached houses or house and land packages.

Buyers can deduct construction costs incurred on or after the contract date from the purchase price to determine the property's duty value. Based on this amount, the discount can be calculated.

All off-plan buyers, including first home buyers and investors, are eligible for this discount.

Eligibility is based on the date the contract was entered into, regardless of whether settlement occurred before or after the end of the 12-month window.

For example, contracts signed before October 21, 2024 but concluded within the 12-month window are not eligible.

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Are newly built but unoccupied flats and townhouses eligible?

Completed but unoccupied properties are ineligible if the contract has not been signed within the specified eligibility period – on or after 21 October 2024, for a period of 12 months.

What is the price limit?

There is no price limit for eligible homes.

Is there an income limit for those who qualify?

There is no income limit for eligibility.

All buyers, including first home buyers and investors, qualify for the rebate. Image: realestate.com.au/buy

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Are overseas buyers eligible?

Yes, foreign buyers are eligible, but the relief does not apply to the foreign buyer's additional duty (FPAD), which is calculated on the duty value of the property before any off-plan relief is applied.

Out-of-plan relief only applies to standard land transfer duty liability.

When did the scheme start and how long does it last?

The scheme started on 21st October 2024 and will run for one year till 21st October 2025.

Is the discount compatible with other schemes?

The rebate can be combined with existing off-plan rebates for owner occupiers and first home buyers.

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Examples of how stamp duty relief will work

Example 1: David

David has just signed a contract to buy an off-plan apartment in Melbourne for $790,000. It was recommended that $400,000 of the contract price be spent on the construction of the house.

Typically, he will be required to pay $42,470 in stamp duty, but will pay nothing under the concession. This is because he can deduct construction costs in determining the property's duty value ($790,000 minus $400,000), which brings it below the duty threshold.

Example 2: Julia

Julia agreed to buy a pre-construction townhouse in Geelong for $1.2 million off the plan.

He was informed that $750,000 of this would cover construction costs. Typically, he would owe $66,000 in stamp duty, but can reduce that by deducting construction costs, bringing the stamp duty value down to $450,000.

Because he signed after Oct. 17 and is eligible for the waiver, he will pay just $22,070, saving $43,930. However, as a French citizen, he must pay an additional fee of the full $1.2 million to the foreign buyer.

Looking for an off-plan apartment? See our section.