Victoria Introduces Temporary Stamp Duty Concession for Off-the-Plan Purchases

Victorian Premier Jacinta Allan during question time at Victorian Parliament house in Melbourne, Australia, on Oct. 3, 2023. Asanka Ratnayake/Getty Images

In response to Victoria’s cooling property market, the government has introduced a temporary stamp duty concession for off-the-plan land transfers.

The initiative aims to support the purchase of dwellings, including apartments and townhouses in strata subdivisions, for the next 12 months starting Oct. 21, 2024.

The new concession, expected to be legislated soon, targets buyers who do not qualify for the existing off-the-plan concession, allowing them to deduct construction costs incurred on or after the contract date when calculating the dutiable property value.

“This concession is open to all buyers, including investors, companies, and trusts, with no requirement to qualify for other concessions like the principal place of residence duty concession or the first home buyer duty exemption,” according to the State Revenue Office of Victoria.

Response to Property Market Woes?

This measure appears to stem from the government’s increasing worries about the declining property market in Victoria.

A recent report from the Urban Development Institute of Australia (UDIA) highlighted Labor’s “excessive taxation” as a key factor contributing to the state’s property challenges.

Since 2014, Labor has introduced 55 new or increased taxes, with many directly impacting the property sector.

The 2024-2025 State Budget forecasts that property taxes alone will generate $21.5 billion—almost half of the state’s total tax revenue.

Among the most controversial measures are the Vacant Residential Land Tax, the Windfall Gains Tax, and the removal of off-the-plan stamp duty concessions.

According to the UDIA, these policies have significantly dampened development activity, leading to higher costs for both buyers and renters.

Criteria and Exclusions

To be eligible, properties must be located in a strata subdivision with shared amenities. Notably, house-and-land packages are excluded from this concession.

Eligibility is based on the contract date rather than the settlement date. Contracts signed before Oct. 21 will not qualify, even if settled during the concession period.

For instance, if Michelle signs a contract to buy an apartment for $1 million on Dec. 1, 2024, and $400,000 of the contract price is allocated for construction, she can deduct this amount, reducing her dutiable value to $600,000.

If construction is 50 percent complete at the contract signing, she would deduct $200,000, resulting in a dutiable value of $800,000.

As a foreign purchaser, she would still be subject to FPAD—an additional 8 percent tax applicable to foreign purchasers—calculated on the full $1 million purchase price.

Commercial Property Tax Changes

In related news, the Commercial and Industrial Property Tax Reform Bill 2024 passed the Victoria Parliament recently and took effect on July 1, 2024.

This legislation introduces a new tax regime, where stamp duty is payable once at the time of sale, followed by a tax of 1 percent on the property’s unimproved land value after ten years.