Understanding the off-the-plan duty concession

Buying off the plan

Buying off the plan means buying a property before construction has finished. You can buy off the plan even before construction has started.

When you buy off the plan, you may be eligible for a concession from land transfer (stamp) duty.

The concession applies to:

• land and building packages
• lots in high-rise or low-rise developments (i.e. apartments and townhouses)
• refurbished lots (for example, converting an office building or warehouse into apartments, or keeping the facade while rebuilding internally).

The property may involve a new subdivision.

For refurbished lots, you must sign the contract before the refurbishment is complete. The concession only applies to the first sale after the plan of subdivision is registered. It does not apply to later transactions, including sub-sales of property.

How the concession works

You pay duty on the dutiable value of your property. This is usually the price you paid for the property (or its market value if that is more).

The concession subtracts construction costs that have been incurred after you sign your contract from the property’s contract price. This will reduce the amount of duty you pay.

If your contract price is less than market value, we will assess duty on the property’s value on the contract date.

Eligibility

Contracts signed on or after 21 October 2024 and before 21 October 2026

A temporary off-the-plan concession is available for this period. It benefits buyers who are not eligible for the existing off-the-plan concession, which continues to exist.

This temporary concession is available to all purchasers, including investors, companies and trusts. It does not have to be your principal place of residence or first home.

The property must be a lot in a strata subdivision that has common property, such as a shared driveway. This means the concession:

• applies to apartments, units and townhouses
• does not apply to house-and-land packages if they are not part of a strata subdivision.

There is no threshold for this concession. It is available for properties of any value.

Learn more about the temporary off-the-plan duty concession.

Contracts signed on or after 1 July 2023

If you are not eligible for the temporary off-the-plan concession above, this concession continues to exist.

All purchasers must:

• be eligible for either the principal place of residence concession or the first home buyer duty exemption or concession
• be over 18 years old
• not be a company or a trustee of a trust.

This means the thresholds – after construction costs are subtracted – are:

• $750,000 for first home buyers
• $550,000 for non-first home buyers buying a principal place of residence.

At least one purchaser must move in within 12 months of settlement and use the property as their principal place of residence (home) for 12 straight months. If you do not meet this requirement, you must notify us.

These requirements apply to any substitute purchasers nominated by the purchaser.

First home buyers

If you are buying your first home, you may be eligible for all of these benefits:

• off-the-plan duty concession
• first home buyer duty exemption or concession
• First Home Owner Grant.

You can only get the First Home Owner Grant if the contract price is $750,000 or less, including construction costs.

Contracts signed on or after 1 July 2021 and before 1 July 2023

The Victorian Government temporarily increased the threshold to $1 million.

This meant if the value of your property was $1 million or less after applying the concession, you would be charged duty on that lower value.

All other requirements were the same.

Contracts signed on or after 1 July 2017 and before 1 July 2021

The requirements are the same as contracts signed on or after 1 July 2023.

Calculating the concession

Your vendor must choose one of 2 methods to calculate the concession:

1. The fixed percentage method.

2. The alternative method.

Both methods need information only the vendor will know.

About 6 months before settlement, your vendor will tell your conveyancer or solicitor the dutiable value after applying the concession. If you want to estimate the duty you will pay, ask your conveyancer or solicitor.

To calculate the concession, the vendor must:

• work out the percentage of construction completed when you signed your contract
• select a method of calculating the concession
• provide these details to us when they complete the Digital Duties Form.

We use this information to apply the concession and calculate your duty.

You can learn more about calculating the concession in Revenue Ruling DA-048v2 - Duty concession for off-the-plan sales.

Related parties

If your contract involves related parties – such as relatives or related companies – we may request the market value of the completed property to confirm the dutiable value.

Applying for the concession

Your conveyancer, solicitor, financial institution or their agent normally applies for the concession on your behalf by completing the Digital Duties Form in Duties Online.

Examples

Here are examples to help you understand how the off-the-plan concession works.

Contracts entered into from 1 July 2023, or from 1 July 2017 to 30 June 2021

Purchaser is eligible for the first home buyer exemption but not the First Home Owner Grant (FHOG)

Gustavo signs a contract on 19 July 2023 to buy an apartment off the plan for $950,000. He is a first home buyer and will live in the apartment as his home.

Gustavo signs the contract before construction has started. The vendor tells Gustavo that $510,000 of his contract price will be spent constructing his apartment. This means the dutiable value of his apartment after applying the off-the-plan concession is $440,000 ($950,000 – $510,000).

Gustavo is ineligible for the FHOG because the contract price is more than $750,000.

But he is eligible for the first home buyer duty exemption because the dutiable value is less than $600,000. This means Gustavo will pay no duty.

Purchasers are eligible for the first home buyer concession but not the FHOG

Asha and Alex sign a contract on 3 February 2020 to buy a house off the plan for $1,150,000. They are first home buyers and will live in the house as their home.

Asha and Alex sign the contract before construction has started. The vendor tells the couple that $517,500 of their contract price will be spent constructing the house. This means the dutiable value of their house after applying the off-the-plan concession is $632,500 ($1,150,000 – $517,500).

Asha and Alex are ineligible for the FHOG because the contract price is more than $750,000.

But they are eligible for the first home buyer duty concession because the dutiable value is less than $750,000.

This means Asha and Alex pay duty on only $632,500 at the first home buyer concession rates.

Without the off-the-plan concession, Asha and Alex would pay land transfer duty on $1,150,000 at general rates.

Purchaser is eligible for the first home buyer exemption and the FHOG

David signs a contract on 18 September 2020 to buy a $740,000 unit in a new development as his home. He signs the contract before construction has started.

It is David’s first home and he is eligible for the First Home Owner Grant and the first home buyer duty exemption/concession.

The vendor tells David that $333,000 of his contract price will be spent constructing his unit. This means the dutiable value of David’s unit after applying the off-the-plan concession is $407,000 ($740,000 – $333,000).

This means David will pay no duty, because the dutiable value is under the $600,000 threshold for the first home buyer exemption. He will also receive the FHOG.

Without the off-the-plan concession, David would pay land transfer duty on $740,000 at the first home buyer concession rates.

Purchaser is eligible for the first home buyer concession

Li-Na buys an apartment off the plan on 1 October 2020 for $1,200,000. She is a first home buyer. She signs the contract before any construction has started.

The vendor tells Li-Na that $470,000 of her contract price will be spent on constructing her apartment. This means the dutiable value of Li-Na’s apartment after applying the off-the-plan concession is $730,000 ($1,200,000 – $470,000).

This means Li-Na will pay duty on $730,000 at the first home buyer concession rates.

Without the off-the-plan concession, she would pay duty on $1,200,000.

Home buyer is eligible for the principal place of residence concession

Sisi signs a contract on 5 August 2019 to buy an off-the-plan apartment for $700,000. She is not a first home buyer but is buying the apartment to live in as her home. She signs the contract before construction has started.

The vendor tells Sisi that $525,000 of her contract price will be spent on constructing her apartment. This means the dutiable value of her apartment after applying the off-the-plan concession is $175,000 ($700,000 – $525,000).

This is below the $550,000 threshold for the principal place of residence concession.

Sisi will only pay duty on $175,000 at the principal place of residence concession rates.

Without the off-the-plan concession, Sisi would pay land transfer duty on $700,000 at general rates.

Contracts entered into between 1 July 2021 and 30 June 2023

Purchaser is a first home buyer and the off-the-plan value is more than $750,000

Kris buys an apartment off the plan on 1 October 2021 for $1,300,000. He is a first home buyer. He signs the contract before any construction has started.

The vendor tells Kris $530,000 of his contract price will be spent on constructing his apartment. This means the dutiable value of his apartment after applying the off-the-plan concession is $770,000 ($1,300,000 – $530,000).

This is above the $750,000 threshold for the first home buyer concession.

But it is below the temporary $1 million threshold for the off-the-plan concession for contracts entered into between 1 July 2021 and 30 June 2023.

This means Kris will pay land transfer duty on a dutiable value of $770,000 at general rates. Without the off-the-plan concession, Kris would have paid duty on $1,300,000 at general rates.

Purchaser is a home buyer and the off-the-plan value is more than $550,000

John buys an apartment off the plan on 1 August 2021 for $1,100,000. He is not a first home buyer but will live in the apartment as his home. He signs the contract before any construction has started.

The vendor tells John that $500,000 of his contract price will be spent on constructing his apartment. This means the dutiable value of his apartment after applying the off-the-plan concession is $600,000 ($1,100,000 – $500,000).

This is above the $550,000 threshold for the principal place of residence concession. But it is below the temporary off-the-plan threshold of $1 million.

If John lives in the apartment as his home, he will pay land transfer duty on $600,000 at general rates.

Without the off-the-plan concession, John would have paid land transfer duty on $1,100,000.

Purchaser is a home buyer and the off-the-plan value is more than $550,000

Misha buys a townhouse off the plan on 1 December 2021 for $1,700,000 to live in as his home. He signs the contract before any construction has started.

The vendor tells Misha that $600,000 of his contract price will be spent on constructing his apartment. This means the dutiable value of his townhouse after applying the off-the-plan concession is $1,100,000 ($1,700,000 – $600,000).

This is above the temporary off-the-plan threshold of $1 million, so Misha will pay land transfer duty on $1,700,000 at general rates.

Construction underway before contract is signed

RJB Pty Ltd is building a multi-lot high rise development made up of 25 apartments. It has been selling apartments off the plan while it completes construction of the development. 

Aaliyah agrees to buy an apartment for $800,000. She is not a first home buyer but will live in the apartment as her home.

At the time of signing the contract, RJB has completed 20% of the construction relating to Aaliyah’s apartment.

When construction is completed and the purchase settles, the vendor (RJB) provides information so we can calculate the off-the-plan concession. RJB decided to use the fixed percentage method, rather than the alternative method, as set out in Ruling DA-048v2 – Duty concession for off-the-plan sales.

Under the fixed percentage method, construction costs for an apartment in a multi-lot high rise are 75% of the contract price. In this example, that means $600,000 ($800,000 × 75%).

Aaliyah can only get the off-the-plan concession for construction costs after she signed her contract. Because 20% of construction was completed when Aaliyah signed her contract, 80% was still to go.

This means Aaliyah can claim a concession of $480,000 ($600,000 × 80%). The dutiable value of her apartment after applying the off-the-plan concession is $320,000 ($800,000 – $480,000).

This is below the $550,000 threshold for the principal place of residence concession.

Aaliyah will only pay duty on $320,000 at the principal place of residence concession rates.

Without the off-the-plan concession, Aaliyah would have paid land transfer duty on $800,000 at general rates.

To learn more about how to calculate the concession, Revenue Ruling DA-048v2 - Duty concession for off-the-plan sales.