In March the Victorian State Government announced that first home buyers won’t need to pay ‘stamp duty’ on homes valued up to $600,000, which will provide significant savings for first timers.
Additionally, those buying a home valued between $600,000 and $750,000 will also be eligible for a concession, which will be applied on a sliding scale. Significantly, the exemption and concession will apply to established homes as well as new builds.
For those new to real estate, stamp duty is a government charge imposed on many types of financial transactions such as a property purchase or share transaction. The various state and territory governments, rather than the Federal Government, oversee stamp duty, and consequently the tax can be calculated differently whether you’re buying in Melbourne, Perth or Darwin.
To add a layer of confusion, there are two categories of stamp duty. The most significant impost is the duty charged against the purchase price of a home. However, should you borrow money to acquire the home – and let’s face it most of us do – then the state and territory governments will hit you with a stamp duty impost against the mortgage.
More significantly, the Victorian Government will also remove off-the-plan stamp duty concessions on investment properties. This legislative change means the off-the-plan stamp duty concession will now be available solely for those who intend to live in the property.
It will be interesting to see whether other state or territory governments follow the Victorian Government’s lead. In the meantime, to find out more about first home buyer concessions in your state or territory, contact your local office of state revenue or a Raine & Horne agent.