What Homebuyers Need To Know About Victoria’s Temporary Off The Plan Duty Concession

The Victorian government announced a temporary stamp duty concession for off-the-plan apartments, units and townhomes from 21 October 2024, for a period of 12 months.

With the Victorian government’s goal of building 800,000 new homes over the next decade, this temporary concession is set to cut costs, speed up development and allow homebuyers to buy more affordable off-the-plan homes.

MORE: How slashing stamp duty could help Victoria win the new homes race

Previously, first-homebuyers and other owner-occupiers were the only ones eligible for stamp duty concessions on off-the-plan properties. Concessions were also subject to price caps.

Now, not only is the stamp duty concession available to all buyers including investors, but price caps have been scrapped.

For those looking for off-the-plan properties, here’s what you need to know about the stamp duty overhaul.

What is stamp duty?

Stamp duty, officially known as land transfer duty, is a one-off fee for transferring the title of a property into the buyer’s name. It serves as a tax on the transaction, payable at the time of purchase.

The temporary stamp duty concession will last until 21 October 2025. Picture: realestate.com.au/buy

How will the temporary concession work?

The temporary stamp duty concession will be available to all off-the-plan apartments, units and townhomes. It is not applicable to freestanding houses or house and land packages.

Buyers can deduct the construction costs, incurred on or after the contract date, from the purchase price to determine the dutiable value of the property. Based on this amount, the concession can be calculated.

All buyers purchasing off the plan, including first-homebuyers and investors, qualify for this concession.

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

For example, contracts signed before 21 October 2024, but settled during the 12-month window, are ineligible.

MORE: 6 good reasons to buy off the plan

Do newly completed but unoccupied apartments and townhomes qualify?

Properties that are completed but have not been lived in, do not qualify unless the contract was signed within the specified eligibility period – on or after 21 October 2024, for 12 months.

What is the price cap?

There is no price cap for eligible homes.

Is there an income limit for those eligible?

There is no income limit for eligibility.

All buyers, including first-homebuyers and investors, qualify for the concession. Picture: realestate.com.au/buy

Are foreign buyers eligible?

Yes, foreign buyers are eligible, but the concession does not apply to the foreign purchaser additional duty (FPAD), which is calculated based on the dutiable value of the property before any off-the-plan concession is applied.

The off the plan concession is applicable only to the standard land transfer duty liability.

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

The scheme started on 21 October 2024 and will last one year, until 21 October 2025.

Is the concession compatible with other schemes?

The concession can be combined with existing off-the-plan concessions for owner-occupiers and first home buyers.

MORE: Grants and incentives for first home buyers

Examples of how the stamp duty concession will work

Example 1: David

David has just signed a contract to buy an off-the-plan apartment in Melbourne for $790,000. He has been advised $400,000 of the contract price will go towards the construction of his home.

Typically, he would be required to pay $42,470 in stamp duty, but under the concession, he won’t pay anything. This is because he can deduct the construction costs when determining the dutiable value of the property ($790,000 minus $400,000), which places him below the dutiable threshold.

Example 2: Julia

Julia has agreed to purchase a townhouse off the plan in Geelong for $1.2 million, prior to construction.

She has been informed $750,000 of this will cover construction costs. Typically, she’d owe $66,000 in stamp duty, but she can reduce it by deducting the construction costs, lowering the dutiable value to $450,000.

Since she signed after 17 October and qualifies for a concession, she’ll pay only $22,070, saving $43,930. However, as a French citizen, she must pay foreign purchaser additional duty on the full $1.2 million.