Victoria’s temporary off-the-plan duty concession: A guide to the stamp duty overhaul

A temporary land transfer (stamp duty) concession for off-the-plan purchases within strata subdivisions has been announced by the Victorian Government. It is only eligible where a contract was entered into on or after 21 October, 2024, and lasts for 12 months.

How will the temporary off-the-plan duty concession work?

The stamp duty concession will be available to all off-the-plan purchases. Under the concession, the purchaser will be able to deduct the construction costs incurred when determining the dutiable value of the purchaser’s property. All purchasers including investors, companies and trusts, are eligible for the concession, so there is no requirement to be eligible for either the principal place of residence duty concession, or the first home buyer duty exemption or concession.

Examples of how the stamp duty concession will work

Scenario 1: Andrew

Andrew has just signed a contract to buy an apartment off the plan in Melbourne for $790,000, before any construction has begun. He is advised that $400,000 of the contract price will be spent on the construction element of his home. Normally, he would pay $42,470 in stamp duty, however under the plan, he will not pay anything, as he is able to deduct the construction costs when calculating the dutiable value of the property ($790,000-$400,000) and he is under the dutiable threshold.

Scenario 2: Suzanne

Suzanne has signed a contract to buy a townhouse off the plan in Geelong for $1.2 million, before construction has begun. She is advised that $750,000 of the contract price will be spent on the construction element of her home. Normally, she would pay $66,000 in stamp duty, however, she can deduct the construction costs, meaning her dutiable value is $450,000. As she signed the contract after 17 October and she is eligible for the concession, she will pay $22,070 in stamp duty, saving her $43,930. However, Suzanne is an Italian citizen and will have to pay foreign purchaser additional duty on her townhouse. This will be calculated on the full $1.2 million purchase price.

The types of properties are eligible

The concession is for apartments and townhouses, rather than freestanding homes.

Are house and land packages eligible?

No, the Victorian Government has confirmed the concession does not apply to house-and-land packages. The government requires the property to be in a strata subdivision, meaning that there is common property, such as a shared driveway.

Are new apartments and townhomes that have been completed but not lived in yet eligible?

No, the contract must have been signed within the eligibility period. This is on or after 21 October, 2024 for a period of 12 months.

What is the price cap on homes eligible?

No price cap for the concession has been outlined in the Victorian Government’s plans.

What are the eligibility requirements for buyers?

Eligibility is based entirely on the date the contract of sale is signed. This is irrespective of whether settlement occurs before or after the end of the 12-month window.

Is there an income limit for those eligible?

No income limit for the concession has been outlined in the plans.

Are foreign buyers eligible?

Yes, however foreign purchaser additional duty will still be calculated on the dutiable value of the property before any concession has been applied.

When does the scheme start?

The new concession will be available for 12 months from the date the contract has been entered into.

How long does the scheme last?

The scheme will last for 12 months, meaning eligibility is based on the date the contract is entered into. It does not matter whether settlement occurs before or after the end of the 12-month window.

Can the scheme be used with other schemes and incentives?

Yes, the existing off-the-plan concession for owner-occupiers and first home buyers will continue to apply.