The 2020 Victorian State Budget has been a positive one for homebuyers, providing many with an opportunity to get into the market earlier with changes to stamp duty. While Victoria has decided that they wouldn’t follow down the same path of New South Wales in transitioning away from stamp duty, they have announced that there will be cuts to stamp duty for homebuyers.
What are the changes to stamp duty in Victoria?
The two key changes that were announced were as follows, which apply for residential properties with a dutiable value up to $1 million:
- A discount to stamp duty of 50% for new residential properties
- A discount to stamp duty of 25% for existing residential properties
Importantly, to be eligible for the discount, the contract must be entered into between 25 November 2020, and 30 June 2021.
Further to the changes to residential property, the Budget also outlined that they would bring forward a 50% discount to stamp duty for the purchase of land to be used for commercial purposes in regional Victoria. This will apply to those purchase contracts that are entered into after 1 January 2021.
Will the discounts apply for investors as well?
Based on the information received so far, it would appear that the new discounts are not reserved solely for owner-occupiers, which is great news for Australian expats and residents looking to invest into the Victorian property market up to the price cap. We expect that this may bring some property investors back into the property market given the reduced stamp duty expense, and allow others to get in faster.
How much of a saving does this represent?
Let’s consider two simple scenarios:
In the first, John and Sue are looking to purchase their off-the-plan new home in Melbourne for $900,000. This would be an upgrade for them, which means they aren’t first home buyers. Prior to the stamp duty discounts applying, the stamp duty would have been $49,070. With the discounts, this would only be $24,535, representing a whopping discount of $24,535.
If we assume that John and Sue were instead looking to buy an existing property, they would only receive the 25% discount. This would mean that their stamp duty payable in this scenario would be $36,802.50, which represents a discount of $12,267.50, which is still a significant saving for most households.
How do I get the stamp duty discount?
As long as the criteria regarding the contract date being between 25 November 2020 and 30 June 2021, and the purchase price is below $1 million, you will be eligible for the stamp duty discounts, which will be confirmed by your solicitor or property conveyancer. Unlike the first home owners’ grants, and other such incentives, there aren’t additional application forms to be completed by you with your purchase.
If you’d like to find out how much of a discount you’re eligible for and how much you can borrow with these new Victorian stamp duty changes, reach out to our team at Loansuite. We can run the numbers for you and get you into your own home or new investment property faster.
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