Stamp duty is basically a tax on your property purchase and is often the biggest cost of buying a home. However, clever property buyers know that many state and territory governments offer stamp duty savings or concessions for some properties including off the plan homes. Generous grants are also available to first home buyers to help them cover the costs of buying a new property.
Stamp duty savings
You can often make substantial stamp duty savings if you buy off the plan. Some state governments in Australia offer bonuses and reductions or have reduced stamp duty to encourage new development. In Victoria, the full rate of stamp duty applies on fully built homes, however you can receive generous concessions when you buy off the plan. The further along the construction of the property the less the stamp duty savings you get.
Avoiding stamp duty
The simple reason that you get a stamp duty saving for off the plan sales is because at the time you enter into the contract the stamp duty is based on the value of the land and not the property (as the house is not built yet).
For example if you buy a $400,000 home in Victoria off the plan (before construction starts) you will be entitled to approximately $16,000 in stamp duty savings. Once construction starts you can then claim a percentage of the stamp duty savings depending on what stage of the construction you enter the sales contract.
According to the State Revenue Office of Victoria typically, for single storey developments, the following indicates the percentage of construction at the various stages:
– 15 per cent for base (slab/foundations etc)
– 30 per cent for frame
– 65 per cent for lock up
– 90 per cent for fixing
– 100 per cent for completion.
The exact amount of savings you make depends on the price you pay for your property as that is what it is calculated from. So to get the maximum savings you need to buy the property off the plan before construction has started.
The stamp duty concession is designed to help encourage new building activity and give home buyers a tax break.
First Home Owners Grant
In Victoria, if you entered a contract after 1 July 2013 to build or purchase a new home, a payment of up to $10,000 is available for eligible first home buyers.
The grant is designed to help buyers with the costs involved with buying a first home. The grant provides some financial support to help make it easier for people to buy their first home.
Coupled with stamp duty savings, first home buyers can get a great jump start into their first property, if they buy a home off the plan.
You can find out more about Victorian stamp duty savings and the First Home Owners Grant on the State Revenue Office website www.sro.vic.gov.au
Other stamp duty and concession links
• NSW – www.osr.nsw.gov.au
• QLD – www.osr.qld.gov.au
• SA – www.revenuesa.sa.gov.au
• TAS – www.treasury.tas.gov.au
