Stamp duty payable will increase significantly as of 1 July 2017 for investors who purchase ‘off-the-plan’ property in Victoria.
Currently, investors receive generous discounts off the full stamp duty amount that is payable on completed property. In March this year, the Victorian State Government announced that this ‘off-the-plan concession’ for investors will be removed.
Stamp duty savings for investors who purchase off-the-plan property in Melbourne before 30 June 2017 are substantial. For example, the stamp duty payable for an apartment purchased before 30 June at a price of $440,600 would be approximately $2,000. The stamp duty payable after 1 July 2017 would increase from $2,051 to a sizeable $21,506.
“This is good news for investors who already own Melbourne apartments and it is also very good news for investors who invest in the Melbourne market before the 1 July deadline,” said Ironfish National Property Director, Grant Ryan.
The end to off-the-plan stamp duty concessions in Victoria comes off the back of a 10-year record low 1.5 per cent vacancy rate in Melbourne for March 2017, according to SQM Research data. Earlier this year, the Victorian Government also introduced a set of strict new design guidelines called “Better Apartment Deisgn Guidelines” to improve the liveability of new Melbourne apartments. These new rules have already seen a reduction in the supply of future apartment developments by requiring larger sizes and lower project yields – making many projects unviable. This is predicted by many industry experts to create further upward price pressure.
However, in good news for first-home-buyers, from 1 July 2017, stamp duty will be abolished for first home buyers for properties up to $600,000. Stamp duty will be discounted on a sliding scale for properties between $600,000 and $750,000.