Under the new stamp duty changes investors will no longer be eligible for the off-the-plan concessions as from July 1st, 2017. This means if you intend on investing in an off-the-plan holiday home, investment or commercial property the concession will no longer apply. First home owners on the other hand seem to be the winners in these changes, they will enjoy stamp duty concessions on both new or established properties up to a certain threshold.
The changes to stamp duty are a clear relief for First Home Buyers as they get to benefit not only from the abolishment of stamp duty if they purchase a new or existing home valued under $600,000 but also, they benefit from the First Home Owners Grant of $10,000 and/or $20,000 for regional areas. All purchasers and their partners must meet the eligibility criteria for the First Home Owner Grant to be entitled to the duty exemption/concession.
This could see first home owners on the front foot by tens of thousands of dollars.
New stamp duty changes effective from 1 July 2017:
- First home buyers to pay no stamp duty on properties valued under $600,000
- Discounts on a sliding scale for purchasers between $600,000 – $750,000
May you be a first home owner or purchasing a new principal place of residence, off the plan stamp duty concessions will only be available for people who intend to occupy the property for at least 12 months.
In Victoria stamp duty is split into two parts, the land component and the construction component. If a property is purchased off the plan and the construction has not yet started you only pay stamp duty on the land component. If you buy off the plan and construction has begun you pay stamp duty on the land component and then a tiered amount for construction depending upon the amount of development. A completed property would require the full stamp duty to be paid on both the land and construction component.
Investors who have purchased off-the-plan commercial or residential properties who entered into a contract before 1 July 2017 will still be entitled to a stamp duty concession. Remember investing in property is a long-term investment so consider the capital gain and initial cost to determine if the investment is worthwhile.
Victorian Stamp Duty remains one of the highest in Australia and the changes are expected to generate an additional $841 million in stamp duty revenue. The revenue is said to be reinvested into making more affordable housing for first home buyers.
Investors will no longer be eligible for the stamp duty concessions for new property as from 1 July 2017 and further they will no longer be able to claim tax deductions on travel costs when visiting the property and tightening of depreciation deductions will also produce further revenue for Treasury.
First home buyers will save on stamp duty and be assisted with the first home owners grant as well as receiving assistance in saving for a deposit of up to $30,000 through their superannuation funds.
This stamp duty calculator can assist you in working out how much stamp duty you will need to pay for your individual circumstance: http://stampduty.calculatorsaustralia.com.au/stamp-duty-victoria
Should you require further clarification please contact one of our financial Advisers or Mortgage Brokers on (03) 5976 8426.