There is a temporary land transfer (stamp) duty concession and exemption available for purchases of residential property, with a dutiable value of up to $1 million, located within the City of Melbourne local government area:
- A 50% concession is available for new residential properties. It applies to contracts entered into from 1 July 2021 to 30 June 2022.
- A full exemption is available for new residential properties that have remained unsold for 12 months or more since completion of construction. It applies to contracts entered into from 21 May 2021 to 30 June 2022.
The 50% concession applies after all other eligible benefits, such as the first home buyer duty concession, the principal place of residence concession (including any off-the-plan concession), and the pensioner concession have been taken into account.
While foreign purchasers are also entitled to the concession or exemption, provided the transfer meets the eligibility requirements, it does not apply to the foreign purchaser additional duty component of the transaction.
Is my transaction eligible?
To be eligible for this concession or exemption, your purchase must:
- be for residential property,
- have a new home affixed to the land,
- have a dutiable value of $1 million or less,
- be located in the City of Melbourne local government area, and
- be a bona fide purchase for adequate consideration (not a gift).
It is not necessary that you use the new home as your principal place of residence, which means it can be an investment purchase.
For the exemption, there is an additional requirement that an occupancy permit for the new home was issued at least 12 months before the contract was entered into.
The property must still be a new home, in the sense it has not been previously sold or occupied as a residence or for short term accommodation since the occupancy permit was issued (essentially, the property was unsold stock).
The concession or exemption does not apply to:
- Any residential property transaction with a dutiable value over $1 million.
- A transfer that obtains the commercial and industrial land concession (i.e. the purchase of residential property in regional Victoria for the purpose of converting it for a commercial or industrial use).
What is residential property?
Residential property is land capable of being used solely or primarily for residential purposes and that may lawfully be used in that way.
This means the land must have a completed home that you can lawfully live in at the time of the transfer. If the land is a mixed-use property (e.g. a milk bar and house), then the primary use must be residential.
Definition of a new home
A 'new home' means the same as it does under the First Home Owner Grant Act 2000. It includes a newly built home and a land and building package. To be considered a new home, the home cannot have been previously sold or occupied as a place of residence or used for short term accommodation.
How do I apply?
You or your representative are currently required to provide information about a transaction when lodging the Digital Duties Form. The State Revenue Office will rely on the information disclosed in this form to automatically apply the concession or exemption if all eligibility criteria are met.
Frequently asked questions about the duty concession or exemption
Is there a threshold?
Yes, the dutiable value of the residential property cannot be above $1 million. Dutiable value is the higher of the consideration paid for the transfer (i.e. usually sale price) or its unencumbered value. If eligible, the off-the-plan concession can apply to reduce the dutiable value of the property being purchased to $1 million or less.
Will the concession or exemption be available for the purchase of vacant residential land (i.e. a house built subsequent to settlement)?
No, the exemption or concession only applies to new residential properties where there is a home affixed to the property at the time of transfer.
Can the concession or exemption apply to a gift transfer?
No, the concession or exemption is only available for bona fide purchases of residential property for adequate consideration. Bona fide means ‘genuine’ purchases. Gifts, including partial gifts where the transferee does not pay full value, or other transactions that do not involve consideration are not entitled to the concession or exemption.
Can the concession or exemption apply to a fractional transfer?
Yes, however the unencumbered value of the whole property must be $1 million or less.
For example, Joe pays $475,000 for a 50% interest in a residential property worth $950,000. Joe will be entitled to the concession or exemption for the transfer of the 50% interest as the value of the property is not more than $1 million.
Can the concession or exemption apply to a landholder transaction under Chapter 3 of the Duties Act 2000 (the Duties Act) where the land holdings of the landholder include a residential property with a value of $1 million or less?
No, the concession or exemption does not apply to a relevant acquisition under the landholder provisions. The concession or exemption is only available for certain transactions under Chapter 2 of the Duties Act.
Can the concession or exemption apply to the grant or transfer of a dutiable lease under Chapter 2 of the Duties Act?
Yes, the concession or exemption can apply to the grant or transfer of a dutiable lease. The subject site must be land capable of being used solely or primarily for residential purposes and lawfully able to be used in that way.
How long is the concession or exemption available?
The concession or exemption will apply to transfers where the contract was entered into on or after 21 May 2020 for the exemption, or 1 July 2021 for the concession, and on or before 30 June 2022.
Does the transfer have to be completed within the concession or exemption period?
No, it is not necessary for the transfer of the property (i.e. settlement of the purchase) to occur during the concession or exemption period. The relevant date is the date the contract for the purchase was entered into.
Do I have to live in the property as my principal place of residence (my home)?
No, you do not need to live in the property to be eligible. The concession or exemption can apply to the purchase of a residential investment property.
Does the concession or exemption apply to established homes?
No, the concession or exemption only applies to residential property to which a new home is affixed. To be a new home, the home must not have been previously sold or occupied as a place of residence or used for short term accommodation.
Can this concession or exemption be applied in conjunction with other concessions?
Yes, the concession or exemption will apply to the land transfer duty payable after all other relevant concessions are applied to the transfer. These may include the:
- first home buyer duty concession,
- principal place of residence concession,
- off-the-plan concession, and
- pensioner concession.
However, the concession or exemption does not apply to:
- foreign purchaser additional duty payable on the transfer, or
- transactions that obtain the regional commercial and industrial land concession.
Does the concession or exemption apply to homes purchased off the plan?
Yes, the concession or exemption is applied after land transfer duty, including any concessions such as the off-the-plan concession, is calculated. If the purchase attracts the off-the-plan concession, the dutiable value of the residential property for the purpose of this measure is the dutiable value after the off-the-plan concession is applied.
The off-the-plan concession is only available if the home becomes your principal place of residence and you meet a residence requirement.
The threshold for the off-the-plan concession has been temporarily increased to $1 million for all home buyers for contracts entered into on or after 1 July 2021 and on or before 30 June 2023.
Yes, all purchasers of residential property, including a foreign purchaser, are entitled to the concession or exemption provided the transfer meets the eligibility requirements.
However, the concession or exemption will not apply to the foreign purchaser additional duty component of the land transfer duty calculation.
This is paid at the usual rate. The new exemption or concession only applies to the land transfer duty payable on a transfer if all eligibility requirements are met.
Does the concession or exemption apply to residential property purchased via a terms contract?
Yes, however the contract must have been entered into during the qualifying period and all other eligibility criteria must be met.
Can I obtain the concession or exemption more than once?
Yes, the concession or exemption is not limited to one purchase. Provided your transfer meets all eligibility criteria you can obtain the benefit of the concession or exemption more than once.
I have contracted to purchase residential property prior to the commencement of these measures but settlement hasn’t occurred yet. Can I sign a new contract to benefit from the concession or exemption?
No, the concession or exemption is only available for purchases agreed to during the relevant qualifying period (21 May 2021 to 30 June 2022 for the exemption and 1 July 2021 to 30 June 2022 for the concession). Replacement contracts are specifically excluded from these measures.