On 21 October 2024, the Victorian Government announced a new temporary off-the-plan land transfer (stamp) duty concession.
The new concession will be available for off-the-plan purchases of dwellings (including apartments and townhouses) within strata subdivisions where the contract is entered into from 21 October 2024, for 12 months.
The new concession is expected to be legislated shortly.
The concession will benefit those who are not eligible for the existing off-the-plan concession, which still remains.
How does the concession work?
A new off-the-plan concession for purchases of dwellings in a strata subdivision will be available for contracts entered into on or after 21 October 2024 for 12 months.
The new concession will be available to all off-the-plan purchases and will allow the purchaser to deduct the construction costs incurred on or after the contract date when determining the dutiable value of the purchaser’s property.
The concession will be available to all purchasers, including investors, companies and trusts, meaning there would be no requirement to be eligible for either the principal place of residence duty concession or the first home buyer duty exemption or concession.
The existing off-the-plan concession for owner-occupiers and first home buyers will continue to apply.
Am I eligible?
To be eligible, the property must be located in a strata subdivision, which means that there must be common property in the subdivision, such as a shared driveway.
The concession does not apply to house-and-land packages.
Timing of the concession
Eligibility is based on the date the contract of sale is entered into, irrespective of whether settlement occurs before or after the end of the 12-month window in which the concession applies.
Contracts signed before the commencement date of this concession, but settled during the 12-month window, are ineligible.
Foreign purchaser additional duty
The concession does not apply to foreign purchaser additional duty (FPAD) as this is calculated on the dutiable value of the property before any off-the-plan concession is applied. The off-the-plan concession will only apply to the general land transfer duty liability.
Calculating the concession
The calculation of duty under the new off-the-plan concession will operate similarly to the existing off-the-plan concession.
When the new off-the-plan concession applies, purchasers will be able to deduct the construction costs incurred on or after the contract date from the dutiable value of the property. Land transfer duty will then be calculated on this reduced amount. Other concessions may also apply based on this reduced amount.
Example
Michelle signs a contract to buy an apartment off the plan for $1 million on 1 December 2024, before any construction work has begun. The vendor advises Michelle that $400,000 of the contract price will be spent on constructing her apartment. Michelle intends to rent out her apartment upon construction.
Michelle is able to deduct the construction costs when calculating the dutiable value of the property, which results in the dutiable value coming down to $600,000 ($1 million – $400,000).
If at the time of signing the contract construction was 50% complete, then the construction costs which can be deducted are $200,000 ($400,000*50%) and the dutiable value would be $800,000 ($1 million - $200,000).
Michelle is also a foreign purchaser, and therefore has to pay FPAD on this transaction. FPAD will be calculated on the $1 million purchase price.
Frequently asked questions
What if I settle the transaction after the end of the concession eligibility window?
Off-the-plan concession eligibility is determined based on the date you sign your contract.
As long as you sign your contract within the eligibility period, being on or after 21 October 2024 for a period of 12 months, you will be eligible for the off-the-plan concession regardless of when you settle the transaction.
I signed a contract before 21 October 2024 but the transaction hasn’t settled yet. Am I eligible for this concession?
No, if you signed a contract before 21 October 2024 you are not eligible for this concession.
What if I enter a contract and it is settled before the concession is legislated?
In the unlikely event of an off-the-plan contract entered into on or after 21 October 2024 being settled prior to the concession being legislated, the purchaser will need to pay stamp duty and can apply for a refund when the measure becomes law.
Applying for the temporary off-the-plan concession
Generally, your conveyancer, solicitor, financial institution or their agent applies for the concession through Duties Online and completing the Digital Duties Form.
Your vendor or transferor or their representative will enter the percentage of construction or refurbishment completed after the contract date and the other details required into the Digital Duties Form, which automatically calculates the concession. Your representative will complete your part of the Digital Duties Form to claim the concession.
