The Law Handbook 2024

Chapter 6.2: Buying or selling a house 549 supporting evidence. Where the buyer or their solicitor or conveyancer is applying for the FHOG, this will be paid as a refund after settlement, which may affect what funds are available at settlement. First-home buyers may also be eligible for other duty exemptions or concessions, as set out below. Stamp duty concessions The purchase of property in Victoria triggers a land transfer duty (also known as stamp duty) liability that is payable to the SRO. The amount of duty payable depends on the property’s ‘total dutiable value’, which is usually the purchase price. Depending on the buyer’s circumstances, there may be exemptions and concessions available on the amount of stamp duty payable (or surcharges for trusts, foreign buyers, etc.). For a full list of stamp duty concessions and exemptions, visit www.sro.vic. gov.au/land-transfer-duty . The most common stamp duty concessions and exemptions are the: • principal place of residence concession; • first-home buyer duty exemption or concession; • off-the-plan sales concession; and • pensioner exemption or concession. If the SRO finds out you claimed a concession that you were not entitled to (for example if you do not live in the property for 12 months), you will need to repay it back, probably with penalties. Principal place of residence concession A principal place of residence ( PPR ) stamp duty concession is available if all the below criteria are met: • the property value is less than $550 000; • the buyer intends to move into the property within 12 months of settlement; and • the buyer intends to live at the property as a primary home for at least 12 months. The concession rate depends on the property’s value. First-home buyer duty exemption or concession The first-home buyer duty exemption or concession is available for a first-home buyer if all the below criteria are met: • the property was purchased on or after 1 July 2017; and • the buyer and their spouse or partner satisfy the eligibility requirements for the FHOG (see ‘First Home Owner Grant’, above) other than the purchase of a new dwelling. If the buyer meets the above criteria: • and the total dutiable value of the property is $600 000 or less, the duty exemption applies; • and the total dutiable value of the property is more than $600 000 but not more than $750 000, the duty concession applies. You can calculate how the concession applies using the ‘land transfer (stamp) duty calculator’ on the SRO website (www.sro.vic.gov.au/calculators/land- transfer-calculator) . Off-the-plan sales concession The off-the-plan sales concession only applies to purchases of land and building packages. This concession allows a buyer to deduct the land transfer duty assessable on the cost of constructing their home from the total assessable land transfer duty on the contract purchase price. This means that the land transfer duty is only paid on the ‘dutiable value’, which applies a reduction on the contract price based on the percentage of construction completed at the time the contract was signed. It is this dutiable value that is then used to calculate whether the first-home duty exemption or concession applies (however, confusingly, it is the contract price that determines whether the FHOG is available). Since 1 July 2017, this concession has only been available to buyers who intend to use the property as their principal place of residence. Buyers must also be eligible for either the PPR or the first-home buyer duty concession once the reduced dutiable value of the property is taken into account. If the buyer is ineligible for either of these concessions, then they will be ineligible for the off-the-plan duty concession and will pay full stamp duty at settlement. The complexity of these calculations – which rely on information that isn’t available until shortly before settlement – means that a buyer’s eligibility for this concession and the exact stamp duty payable can’t be reliably estimated at the time of signing the contract, which adds risk to the purchase. Pensioner exemption or concession A buyer who has an eligible pension card can receive a one-off duty exemption or concession when they purchase a new or established home. For contracts entered into from 1 July 2023, you may receive: