If you’re buying property in Victoria, Australia, understanding stamp duty is essential. Stamp duty is a tax levied by the state government on property transactions (as well on the sale of motor vehicles). This guide will help you understand the basics of stamp duty on property transactions, how it’s calculated, and whether you’re eligible for any concessions or exemptions.
What is Stamp Duty?
Stamp duty is a state-imposed tax that property buyers need to pay when they purchase real estate (though there maybe some exemptions if purchasing commercial property. Please contact your accountant Melbourne for further information). Stamp Duty is calculated as a percentage of the property’s purchase price or market value. Generally, the purchase price will be used to determine the amount of stamp duty to be paid. Market value maybe considered by the SRO when the sale of property is not conducted at arms length, (for example, the sale is between yourself and someone else where there is a level of influence i.e. one of you can influence the other). The cost of stamp duty will vary significantly based on 3 factors:
- the value of the property
- whether it’s residential or commercial, and
- if the buyer is eligible for any concessions.
How is Stamp Duty Calculated in Victoria?
The state government provides the rates, stamp duty increases as the property value increases.
For example, as of 2024/2025:
- For properties valued up to $25,000, the stamp duty rate is 1.4%.
- For properties valued between $25,001 and $130,000, the rate is $350 plus 2.4% of the amount over $25,000.
- For properties valued between $130,001 and $960,000, the rate is $2870 plus 6% of the amount over $130,000.
- For properties valued over $960,000, the rate is 5.5% of the purchase price.
To work through an example, suppose you purchase a property for $500,000 then the stamp duty that you will pay is calculated as follows: $2870 + 6% of $370,000 ($500,000 less $130,000 above) = $25,070
To calculate your stamp duty, you can use the State Revenue Office (SRO) Victoria’s online stamp duty calculator. It takes into account the property price and any concessions or exemptions available to you. Please contact your accountant Melbourne if you have any questions.
Stamp Duty Concessions and Exemptions in Victoria
The Victorian government offers various concessions and exemptions to make homeownership more affordable for certain buyers. If you would like assistance with the calculation of any of these concessions, please do not hesitate to contact your tax accountant Melbourne. Anyway, here are some of the most common stamp duty concessions:
- First Home Buyer Duty Concession
- If you’re purchasing your first home, you might be eligible for a concession if the property is valued up to $600,000.
- For properties between $600,001 and $750,000, a sliding scale concession applies.
- You must move into the property within 12 months of settlement and live in the property for at least a year
- Principal Place of Residence (PPR) Concession
- This concession applies to all home buyers, not just first home buyers. This applies to homes valued between $130,000 and $550,000. You must move into the property within 12 months of settlement and live in the property for at least a year
- Off-the-Plan Concession
- If you’re buying an off-the-plan property (such as an apartment under construction), you may be eligible for a reduction in stamp duty, as the tax is based on the value of the land and construction already completed at the date that you sign the contract.
- Pensioner Exemption and Concession
- Pensioners may be eligible for a full or partial exemption on properties valued up to $750,000, depending on specific criteria.
- Young Farmer Exemption and Concession
- Young farmers buying their first farmland may also receive exemptions or concessions.
How to Pay Stamp Duty in Victoria
Stamp duty is due within 30 days of settlement of your property purchase. Your conveyancer or lawyer typically handles the payment on your behalf, transferring funds from their solicitor’s trust account to the Victorian State Revenue Office.
If you’re eligible for a concession or exemption, make sure to inform your conveyancer early, as they will need the documentation to apply for it.
Stamp duty is a significant cost in the property purchasing process, but understanding how it’s calculated and whether you qualify for any concessions can help you plan more effectively. Given the varying rates and thresholds, it’s wise to speak with a tax accountant Melbourne, such as Nobel Thomas, to navigate your specific situation.