- From 1 July 2017, purchasers of off-the-plan (not yet built) commercial or residential investment properties will be liable to stamp duty on the purchase price or market value of the property (whichever greater)
- Investors will possibly pay approximately $15K – $20K* more than what they are currently paying
- Off-the-plan concession only for purchasers who make the property their principal dwelling
Investors should get into the Melbourne property market NOW and exchange by 30 June 2017 to avoid hefty stamp duty charges, which could cost some $15K to $20K* more than current rates. From 1 July 2017, investors of Melbourne property are no longer eligible for stamp duty concessions, resulting in payment of tens of thousands of dollars more. Note: Victoria is the only state in Australia that has stamp duty concessions.
The increase in stamp duty charges are due to the Victoria government’s changes to the First Home Owner Grant and new stamp duty exemptions and reductions for first home buyers (i.e, concessions have been removed to fund these reductions and exemptions). First home buyers in this case refers to local Australians or foreigners with PR who are purchasing a property for the first time with the intent of occupation.
Effective 1 July 2017, off-the-plan stamp duty concessions will only be available for people who intend to live in the property. First home buyers no longer need to pay stamp duty on properties valued under $600K, while discounts are available on a sliding scale for purchases between $600K – $750K.
Impact of new stamp duty on investors
The new laws will impact borrowing capacity as investors will need to include the new stamp duty into their calculations. We advise that you speak to a mortgage broker to understand its full implications.
How does stamp duty currently work?
Victoria has the highest stamp duty rates in all Australia. However, unlike other states, Victoria stamp duty is split into land and construction.
Investors/owners of completed properties pay FULL stamp duty, fulfilling both the land and construction components.
Investors/owners of off-the-plan property that has yet to commence need only pay stamp duty on the land component.
Investors/owners of off-the-plan property that has begun construction will need to pay duty on the land component plus a tiered payment for the construction component depending on how far along construction has taken place.
Example:
Your apartment is valued at $500,000 and its land is valued at $100,000
| PROGRESS | OFF-THE-PLAN | CONSTRUCTION BEGUN | COMPLETED PROPERTY |
| PAYMENT DUE | $2,150 | $2,150 + tiered amount | $25,070 |
AVOID FULL STAMP DUTY COSTS OF $15K – $20k* – INVEST IN MELBOURNE NOW AND EXCHANGE BY 30 JUNE 2017.
*The $15K-$20K estimation is benchmarked on a 1-bedroom property priced at $400K-$500K. A 2-bedroom property priced at $1million or more will cost higher stamp duty charges
CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts.
Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.
Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260
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