What is Stamp Duty and How is it Calculated in Victoria?
Stamp duty is simply a form of Government tax. It is required to be paid for a number of transactions, including property and motor vehicle registrations. The amount of Stamp Duty required depends on the value of the property, generally speaking the higher the consideration or purchase price the higher the stamp duty will be, however there are different ways to reduce the stamp duty through the use of concessions which we will go into later.
When buying a property in Victoria, the purchaser pays the stamp duty on the property, this tax is collected by the State Revenue Office.
How is Stamp Duty Calculated in Victoria?
The amount of stamp duty payable is calculated on a sliding scale, starting at 1.4% for properties whose dutiable value is $25,000 and going up to 5.5% for properties with a dutiable value of $960,000 and above.
The dutiable value of the home is the greater of either the purchase price (including any non-monetary obligations), or the home’s value on the open market.
When the transaction involves related parties (Vendor and Purchaser are family or related somehow, or associated) the stamp duty is calculated using the property valuation, or appraisal. In Victoria this must be provided and generated by a licensed Real Estate Agent and there are no exceptions.
|Dutiable value range||Duty payable|
Up to $25,000
1.4% of the dutiable value of the property
$25,001 to $130,000
$350 plus 2.4% of the dutiable value in excess of $25,000
$130,001 to $960,000
$2,870 plus 6% of the dutiable value in excess of $130,000
$960,001 and above
5.5% of the dutiable value
*Note: These figures are correct at the time of publication but are subject to change. Source: State Revenue Office of Victoria
Stamp Duty Rates can vary depending on:
- If you’re a foreign purchaser or an Australian resident
- If you’re a first home buyer, or not
- Whether it’s going to be your primary residence or an investment property
- Whether you’re buying land or a building
- Whether you’re buying the property, or taking possession of it in another way
- Any other exemptions and concessions you’re entitled to, such as for pensioners
- Whether the property is a farm and has machinery or cattle
If you need an idea of how much stamp duty you will be paying you can use the State Revenue Office online calculator, although in some cases it is not entirely accurate so it is always best to consult an experienced conveyancer for the exact figure.
Stamp Duty Concessions and Reductions in Victoria
Stamp Duty Exemption for First Home Buyers
As of 1 July 2017, first home buyers in Victoria may be exempt from stamp duty on eligible purchases.
You, and your spouse or partner if applicable, must both qualify as first home buyers and be Australian citizens or permanent residents. New Zealanders on a special category visa are also eligible.
The full exemption only applies to homes with a dutiable value up to $600,000. For homes valued at $600,000 to $750,000, you can still get partial exemption.
You also must be buying your principal place of residence. This means you need to live in it for at least 12 continuous months, starting within 12 months of taking possession.
If you’re eligible for stamp duty exemption, there may also be other, additional concessions or benefits available.
One example is the first home owner’s grant, or the off-the-plan concession explained below.
Other Stamp Duty Concessions and Exemptions in Victoria
You can also apply for concessions under the following conditions:
- Land transfers from deceased persons to their beneficiaries
- Transfers between spouses and partners, including transfers after breakups such as part of a divorce settlement
- Certain corporate consolidations or reconstructions
- Family Farms
Other concessions include:
- The principal place of residence (PPR) concession
- Off-the-plan purchase concessions
- Pensioner duty exemption or concession
- Charity and friendly society concessions
- Young farmer exemptions or concessions
Principle Place of Residency (PPR) Concessions:
The principal place of residence (PPR) concession is for properties with dutiable values up to $550,000, where the purchasers intend to use the property as their permanent residence. This means you need to be living there for a continuous period of at least 12 months after taking possession of the property. Note that if you are transferring from a related party and applying for PPR you will need to provide the State revenue Office with proof of payment between parties, this can include bank statements, copies of transactions, receipts or cheques.
Off the Plan Concessions:
You can apply for this concession if you are buying a property off the plan, meaning the property is not yet built or completed and you have only selected it based on viewing the building plans. As of 1 July 2017, this is only available for the purchase of a home that meets the requirements of the PPR concession, or gets a first-home buyer duty exemption/concession. Basically, it’s a different way of calculating the dutiable value, to facilitate the valuation of homes still under construction or renovation and make sure that off-the-plan buyers can also get the exemptions or concessions to which they’re entitled. It is calculated on the value of the property minus the construction costs and can significantly reduce the amount of stamp duty to be paid, as PPR is also applied to he end figure.
Pensioner Exemptions and Concessions:
Pensioners buying a home valued at up to $750,000, to use as their principal place of residence (PPR), may be eligible for duty concessions or exemptions.
There are some conditions and they must hold their own pension card, cards with joint names are not entitled to the concession, only the primary card holder.
Types of cards that are eligible:
- Department of Human Services (DHS) Health Care Card
- Department of Veterans’ Affairs (DVA) Health Care Gold Card
- DHS Pensioner Concession Card/DVA Pensioner Concession Card
- DHS Commonwealth Seniors Health Card/DVA Commonwealth Seniors Health Card
Additional conditions to be eligible:
- Hold an eligible concession card at the property settlement date (must not be expired)
- Have never received this concession before
- Buy the property at market value
- Intend to live in the home as your PPR
Charities and Friendly Societies Exemptions:
A charity or charitable organisation may be exempt from paying stamp duty on land purchases.
Eligible organisations include those:
- Whose operations are predominantly charitable
- Without any possibility of private profit during operation or at wind-up
The organisation’s constitution, or memorandum of association must clearly include clauses which state that the organisation satisfies these requirements. These types of transactions are complicated and require a lot of documentation.
Young Farmer Concessions:
A one-off duty exemption or concession is available to young farmers who are buying their first farmland property valued at less than $750,000. The following conditions apply:
- Young farmers are those under the age of 35
- Farmland valued at less than $600,000 receives a duty exemption on the first $300,000
- Farmland valued from $600,000 to $750,000 receives a duty concession
This concession cannot be used in conjunction with the PPR concession. If eligible for both, you can choose which of the two to use. You’re still eligible for this concession even if you or your partner currently owns, or has previously owned, non-farmland in the past. You are not eligible if either of you has been a shareholder or beneficiary of a trust that owns or has previously owned farmland.
How do I claim a stamp duty concession or exemption in Victoria?
Generally the stamp duty concession is handled by your friendly conveyancer at the time of processing your settlement. The conveyancer will explain to you that you are eligible for a concession and they will calculate the total amount of stamp duty if any for you. If you are already in possession of the property and wish to apply for a concession retroactively, you can go directly to the SRO or have a conveyancer lodge a claim on your behalf.