This article was written by Michael Perez and Stuart Courtney.
Stamp duty removed for first home buyers under $600,000
The Victorian Government has announced that stamp duty will be removed from purchases under $600,000 by first home buyers. It is understood that this change will take effect from 1 July 2017.
The legislation to give effect to this change has not been released and therefore it is unclear at this stage whether the changes will apply to transfers executed on or after 1 July 2017, regardless of when the contract of sale is entered into. If past practice in relation to changes in the stamp duty rate and the introduction of the current principal place of residence concession is any guide, the changes may be expected to take effect in relation to transfers made pursuant to contracts entered into on or after 1 July 2017.
A concessional rate of duty (on a sliding scale) will apply on purchases by first home buyers of homes which are valued between $600,000 and $750,000.
Limitation of the “off the plan" concession
Under the current “off the plan” concession, stamp duty is not payable in relation to the cost of construction which takes place after the contract of sale is entered into. Currently, this concession applies to all types of properties with no restriction on the type of purchaser who is eligible for the concession. As part of the changes for first home buyers, the concession will be amended so that it will only apply to individuals who will live in the property as their principal place of residence or who are eligible for the first home buyer concession.
These changes will therefore mean that the sale of an entire development by a developer to an investor will no longer be eligible for the “off the plan concession”.
New vacant residential property tax
In order to discourage owners of residential property leaving properties vacant, a new annual tax on such properties will be introduced at the rate of 1% on the capital improved value of the property. Exemptions will however apply to holiday homes, homes owned by deceased estates and by owners who are temporarily overseas.
Changes to First Home Owner Grant for regional Victoria
The First Home Owner grant will double from $10,000 to $20,000 for first home buyers who purchase a property in regional Victoria. The increased grant will be available for new home buyers purchasing homes valued at up to $750,000.
The King & Wood Mallesons team will continue to monitor developments in this area closely and keep you up to date with any further developments.