New opportunities for developers following the announcement of new stamp duty concessions in Victoria

The Victorian State Government has announced the expansion of stamp duty concessions, designed to stimulate the construction of apartments, units, or townhouses. The concessions apply for 12 months from 21 October 2024. 

Under the expanded concessions, duty is limited to the value of land and works undertaken before the contract is signed, reducing the dutiable value by the value of uncompleted works. 

In contrast, the existing concessions for off-the-plan purchases are limited to first home buyers and owner occupiers up to set values. These thresholds are calculated using the contract value after the value of uncompleted works is deducted: 

• First-home buyers: Contract value must be under $750,000  
• Owner-occupiers: Contract value must be under $550,000. 

New stamp duty changes announced in Victoria

The latest announcement extends these concessions to anyone buying an off-the-plan dwelling in a strata subdivision and removes the thresholds, so it will apply to purchases of any value. Duty will be calculated on the cost of the land prior to signing the contract and will not take into account any outstanding construction works. 

While the initiative may encourage buyers to purchase off-the-plan homes, it is important to note that there are still additional surcharges for foreign purchasers: 

• The existing 8 per cent surcharge will still apply to any off-the-plan purchases by foreign buyers, as this surcharge is calculated on the dutiable value of the property before the concessions are applied 
• Absentee foreign owners will still be subject to the Absentee Owner Land Tax Surcharge unless an exemption applies. 

The impact on developers

Developers also need to consider the effect of Victoria’s Vacant Residential Land Tax (VRLT) rules, including where construction periods exceed two years and holding unsold stock. While BDO welcomes this move to reduce some of the tax pressure on developers, property taxes in Victoria will continue to be numerous and complex beyond the 12-month duration of these concessions. 

Contact us if you wish to discuss the opportunities presented by the Victorian Government’s announcement, or to learn more about how our tax advisers can support you. 

Or, if you are building or buying your first home, purchasing an investment property or refinancing existing loans, we can explore the available options on your behalf and how these concessions might help you in your property journey. Contact our finance solutions team today.