The Victorian government has recently announced a series of changes to the first home owner grant, stamp duty and vacant residential property tax:
1. Abolition of stamp duty for first home buyers
First home buyers that enter into a contract on or after 1 July 2017 to purchase a new or existing home with a dutiable value of up to $600,000 will be entitled to a full exemption from stamp duty.
Further, duty will be phased in for purchases of homes with a value of $600,001 - $750,000. The rate of duty in this phase-in range is still to be determined.
2. Doubling of the first home owner grant for regional Victoria
The regional first home owner grant will be increased from $10,000 to $20,000 in respect of contracts entered into from 1 July 2017 to 30 June 2020 for the purchase of new homes in regional Victoria with a value of up to $750,000.
First home buyers in metropolitan Melbourne will continue to be eligible for a $10,000 grant.
3. Rebalancing of the off the plan stamp duty concession
The off the plan concession applies to deduct from the contract price the cost of any construction or refurbishment that occurs on or after the date any contract is entered into. In other words, duty is applied to the value of the land and any works on that land at the date the contract is entered into.
For contracts entered into from 1 July 2017, the off the plan concession will only be available to buyers who:
- will occupy the property as their principal place of residence and the dutiable value is less than $550,000; or
- are eligible the new first home buyer duty exemption (i.e. dutiable value less than $750,000).
4. Vacant residential property tax
A vacant residential property tax of 1% will be incorporated into the land tax law and will apply from 1 January 2018 on the capital improved value of residential properties located in inner and middle areas of Melbourne.
The aim of this new tax is to ensure that property owners do not withdraw from the market the supply of properties that are able to be occupied. Importantly, this new property tax will only apply in respect of properties that are unoccupied for more than six months in a given calendar year.
The local council areas where this new tax will apply include Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse and Yarra.
Exemptions will be available, for example, for properties used as holiday homes, those who need a city unit for work purposes, deceased estates, as well as homes owned by Victorians who are temporarily overseas.
