How the first home buyer stamp duty exemption works in Victoria

Are you planning to build or buy your first home in Victoria? It's helpful to know about the concessions and discounts that may apply, so you have better visibility over your budget and how much you'll need to borrow.

Stamp duty (also known as land transfer duty) has long been one of the larger upfront costs for new homeowners, so it's reassuring to know that concessions and exemptions may be available for eligible buyers in Victoria.

If you're a first home buyer, you may be able to claim an exemption or concession from land transfer (stamp) duty if you meet certain criteria. Here's how it works, the current eligibility criteria and how to apply.

Understanding stamp duty

Stamp duty is a government tax applied to most property transactions.

When someone buys land, a home or an investment property, they pay a stamp duty based on the value of the property and how it will be used. The stamp duty costs depend on:

• The dutiable value of the property (market value, or the amount you agree to pay, whichever is higher)
• Whether you intend to live in it
• Whether you qualify for an exemption or concession
• If you're an overseas resident.

In some cases, first home buyers may be eligible for multiple concessions plus the First Home Owner Grant and the First Home Guarantee.

Land transfer duty charges in Victoria

In Victoria, stamp duty is commonly called land transfer duty. How much you pay depends on the dutiable value of the property.

Land transfer duty is calculated using a stepped rate structure with more valuable properties taxed at higher rates. It's usually paid at settlement and must be paid before the property transfer can be registered.

Victoria's State Revenue Office stamp duty calculator helps you estimate how much you might pay based on whether the home will be your principal rate of residence and if you qualify for any duty exemption or concessions.

Stamp Duty concessions and exemptions in Victoria

There are several duty concessions and exemptions that may be available to Victorian home buyers. Each has different eligibility criteria.

First home buyers may be eligible for multiple benefits including the first home buyer duty exemption and the off-the-plan concession (as well as the First Home Owner Grant).

1. First home buyer duty exemption or concession (homes up to $750,000).

If you're a first home buyer in Victoria, you could be eligible for the first home buyer duty exemption or concession, making it a little easier to get into your first home.

• Up to $600,000: No stamp duty is payable (full stamp duty exemption)
• $600,001 to $750,000: You still save, with a reduced stamp duty amount
• Over $750,001: Standard transfer duty rates apply.

How it works

• Applies to eligible buyers who purchase home with dutiable value.
• Not available if you have previously owned a home in Australia
• Can be claimed on a new or established home, or vacant residential land intended for building your first home
• The remaining balance of value above the concession range is subject to general duty rates

First home buyer stamp duty VIC eligibility criteria

The Victorian land transfer duty criteria align with the First Home Owner Grant requirements You must be:

1. An individual (not a company or trust) aged 18 or older
2. An Australian citizen or permanent resident (if you're buying with a person who is not a citizen or permanent resident, additional duty may apply
3. Purchasing the property as your principal place of residence
4. Paying market value for the property

You must also meet the residency requirements:

1. At least one owner must occupy the home as their principal place of residence and live there for at least 12 continuous months within 12 months of settlement
2. For vacant land, you must move in within 12 months from when the occupancy certificate is issued, or within 36 months from the settlement date (whichever is earlier)
3. All purchasers must be enrolled to vote in Victorian elections
4. The residency requirement does not apply to current members of the Australian Army, Navy or Air Force

2. Off-the-plan duty concession (when you sign a contract before construction is finished)

The off-the-plan concession is a temporary Victorian government scheme which reduces the transfer duty if you buy a home before it's finished (or even started).

For eligible off-the-plan purchases, duty is calculated on the land plus what’s already built, not the finished home, which can reduce the amount of stamp duty you pay.

Example: You buy an apartment off the plan for $600,000 and sign before construction starts. $450,000 of the contract price will be spent on construction so duty is calculated on the remaining amount of $150,000, not the purchase price of $600,000.

How it works

• Duty is based on a *lower dutiable value*, which can result in thousands of dollars in savings
• The developer (vendor) works out how much is payable, using one of two approved methods. They tell your conveyancer the reduced value before settlement and duty is calculated on the lower amount.
• Thresholds apply:
• $750,000 for first home buyers
• $550,000 for non-first home buyers buying a principal place of residence

• Property types that may qualify (conditions apply):

• Some land and building packages

• Apartments, units or townhouses

• Some refurbished lots

Eligibility criteria

• The contract must be signed before construction is complete
• You must be over 18 years old and eligible for either the principal place of residence concession or the first home buyer duty exemption or concession
• You must not be a company or trustee of a trust
• At least one purchaser must move in within 12 months and use the property as their home for a minimum of 12 months

A broader temporary concession may be available to all purchasers (home buyers, investors, companies and trusts) of apartments, units and townhouses for contracts signed on or after 21 Oct 2024 and before 21 Oct 2026). Different conditions apply.

3. Principal place of residence (PPR) duty concession (for properties up to $550,000)

The principal place of residence (PPR) concession can reduce the amount of stamp duty you pay if you buy a home with the intention to live in it as your primary residence. This is available to all home buyers, not just first timers.

How it works

• PPR is available to anyone, not just first home buyers (first home buyers do not pay stamp duty on homes valued at up to $600,000)
• It can be used on an existing residential property or a new build
• It can be combined with the first home buyer duty exemption or a pensioner exemption or concession

Eligibility criteria

• You must move in within 12 months of settlement and live there as your primary home for at least a year
• Where there are two or more buyers, at least one at least one of you must meet the occupancy requirement
• It's not available if the home was a gift or heavily discounted.

The PPR can also apply if you buy vacant land to build a home and the value of the land is up to $500,000 (excluding the building contract). You must move in by the earlier of these dates:

• 12 months after you receive the occupancy certificate
• 36 months after settlement.

4. Pensioner and concession cardholder reduction.

If you're an eligible pension or concession cardholder, you may qualify for a one-off reduction or exemption on land transfer duty when buying a home you intend to live in. There are different eligibility requirements for contracts signed before 1 July 2023 and on or after 1 July 2023. For more information, visit the State Revenue Office website.

How to apply for stamp duty exemptions in Victoria

Your conveyancer or legal representative will usually handle the paperwork related to stamp duty after your contract is signed and before settlement.

In Victoria, it's mandatory to submit an electronic Digital Duties Form for all property transfers via the State Revenue Office's (SRO) Duties online portal. The form calculates the duty payable, taking into account all relevant exemptions and concessions.

Stamp duty calculations can be complex so seek independent financial advice or talk to a mortgage broker to understand your options and what you may be entitled to claim.

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