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Buying a property before any buildings works have started or have finished is commonly known as ‘buying off-the-plan’. When you buy off-the-plan, you may be eligible for the off-the-plan duty concession that can apply to contracts for:

  • Land and building packages.
  • Lots in vertical developments (such as residential towers).
  • Lots in horizontal developments (such as low-rise apartments and unit complexes).
  • Refurbished lots.

These properties may or may not involve a new subdivision.

The date of the contract is important as it affects the scope of the off-the-plan concession. 

How does the concession work?

You pay duty on the dutiable value of your property. This is usually the price paid for the property or its market value, whichever is greater. However, when the off-the-plan concession applies, the dutiable value is the contract price minus the construction or refurbishment costs incurred on or after the contract date. This reduces the amount of duty you pay. 

Example 1 - An off-the-plan apartment

Paige buys an apartment off-the-plan as her future home for is $620,000. She signs the contract before any construction has started. The vendor advises Paige that $465,000 of her contract price will be spent on constructing her apartment. 

This means that the dutiable value of Paige’s apartment, after applying the off-the-plan concession, is $155,000 ($620,000 - $465,000).

Am I eligible?

Eligibility depends on a number of factors, with the most important being whether you signed your contract before 1 July 2017 or on or after 1 July 2017.

You must pay at least the market value for your property. If your contract price is less than market value, the concession does not apply and duty will be assessed on the property's value at the time you entered into the contract.

Contracts signed on or after 1 July 2017 

There are certain requirements you must satisfy to receive the off-the-plan concession. 

Purchaser requirement

To receive the off-the-plan concession, you must be eligible for either the principal place of residence concession or the first-home buyer duty exemption or concession

For first home buyers, the means that you and anyone you buy the property with, must meet the First Home Owner Grant (FHOG) eligibility criteria except the FHOG purchase price threshold.

If you meet all of the FHOG eligibility criteria, including the purchaser price threshold (i.e. the contract price for your property is $750,000 or less), you will be eligible for the FHOG (First Home Owner Grant), the first home buyer duty exemption or concession and the off-the-plan concession. 

If you are ineligible for the FHOG only because you bought your first home for more than $750,000 you may still be entitled to the first home buyer duty exemption or concession and the off-the plan concession. 

All purchasers must be over 18 years old, except where a purchaser is the guardian of a person with a legal disability.

The concession is not available to a company or a trustee of a trust buying a property off-the-plan.

Residence requirement

At least one purchaser must use the property as their home for a continuous period of 12 months, starting within 12 months of possession of the property, which is normally settlement.

If the residence requirement is not met, duty will be reassessed and all concessions or exemptions removed. You must notify us within 30 days of any change in circumstances that may result in you failing to meet the residence requirement.

On request, and after being satisfied there is good reason, we may vary the residence requirement.

Dutiable value requirement

The dutiable value of your property is usually the greater of the price paid for the property or its market value except when the off-the-plan concession applies. In these circumstances, the dutiable value of your property is the contract price minus the construction costs incurred on or after the contract date.

The dutiable value of your home after applying the concession must satisfy the value thresholds for the first home buyer duty exemption or concession or principal place of residence concession:  

  • First home buyers
    The dutiable value of your property, after deducting the construction costs incurred on or after the contract date (the off-the-plan concession) from the contract price, must be $750,000 or less.

  • Home buyers
    The dutiable value of your property, after deducting the construction costs incurred on or after the contract date (the off-the-plan concession) from the contract price, must be $550,000 or less.

If the value of your property satisfies the relevant threshold after applying the off-the-plan concession, you will be charged duty on that value. 

If, the value of your property falls above the relevant threshold, after applying the off-the-plan concession you will be charged duty based on whichever is greater, the contract price or market value of the property.

The off-the-plan concession only applies where the contract price reflects the market value of the property being purchased. If your contract price is less than market value, the off-the-plan concession does not apply and duty will be assessed on the value of the property at the time you entered into the contract.

Below are some examples to help explain the off-the-plan concession from 1 July 2017.

Example 2 – Purchaser meets the first home buyer exemption requirements

David signs a contract 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 and/or concession.

The vendor advises David that $333,000 of his contract price will be spent constructing his unit. This means that the dutiable value of David’s unit after applying the off-the-plan concession is $407,000 ($740,000 - $333,000). Because the first home buyer duty exemption is available when the dutiable value of the property is $600,000 or less, David will not pay any duty.

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

Example 3 - First home buyers ineligible for the First Home Owner Grant (FHOG)

First home buyers Asha and Alex sign a contract to buy a house for $1,150,000 off-the-plan as their first home. The couple sign the contract before any construction has started. 

Asha and Alex satisfy the FHOG eligibility criteria but cannot receive the grant because the amount they are paying for the house exceeds the $750,000 FHOG threshold.

The vendor advises Asha and Alex that $517,500 of their contract price will be spent constructing the house. When the off-the-plan concession is applied to their transaction, the dutiable value of their house after applying the concession is $632,500 ($1,150,000 - $517,500).

While this is over the first home buyer duty exemption threshold of $600,000, it is under the first home buyer duty concession threshold of $750,000. Asha and Alex therefore pay duty only on $632,500 at the first home buyer concessional rate.

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

Example 4 – Home buyer meets the principal place of residence concession requirements

After 1 July 2017, Sisi signs a contract 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 advises Sisi that $525,000 of her contract price will be spent on constructing her apartment. This means that the dutiable value of her apartment, after applying the off-the-plan concession is $175,000 ($700,000 - $525,000).

This is less than the principal place of residence duty threshold of $550,000 so Sisi is entitled to the off-the-plan concession and the principal place of residence concession and will only pay duty on $175,000.

Without the off-the-plan concession, Sisi would have paid land transfer duty on $700,000.

Example 5 – Home buyer does not meet the principal place of residence concession requirements

After 1 July 2017, Leon signs a contract to buy an off-the-plan townhouse for $900,000. He is not a first home buyer but is buying the townhouse to live in as his home. When he signs the contract, the construction was at the frame stage.

The vendor then advises Leon that $283,500 of his contract price will be spent on constructing the remainder of the townhouse. 

This means that the dutiable value of Leon’s apartment, after applying the off-the-plan concession, is $616,500 ($900,000 - $283,500).

$616,500 is more than the principal place of residence duty threshold of $550,000, so Leon is not entitled to the off-the-plan concession or the principal place of residence concession. He must pay duty on $900,000 at general rates.

Contracts signed before 1 July 2017

The off-the-plan concession is available to all purchasers and for all property types, including residential investment properties and commercial properties. There are no thresholds relating to the property’s value. The concession may apply even if you nominate a substituted purchaser on or after 1 July 2017.

For contracts signed before 1 July 2017, if you will live in the property as your home, you may also be eligible for:

  • The FHOG if you meet the first home buyer grant eligibility criteria and the contract price for your property was $750,000 or less.
  • The first home buyer duty reduction if you meet the first home buyer grant eligibility criteria and the dutiable value of your property (after applying the off-the-plan concession to your contract price) is $600,000 or less.
  • The principal place of residence duty concession if the dutiable value of your property (after applying the off-the-plan concession to your contract price) is $550,000 or less.

Nominations made on or after 1 July 2017

Where there is a nomination, the key factor in determining eligibility for the off-the-plan concession is the date of the contract of sale. If the contract was signed before 1 July 2017, all purchasers can still apply for the concession even if they have been nominated as a substituted purchaser after 1 July 2017.

However, if the contract was entered into on or after 1 July 2017, any subsequently nominated substitute purchaser(s) must be eligible for the principal place of residence concession or the first home buyer duty exemption or concession for the off-the-plan concession to apply. This will be the case even if the nomination triggers the sub-sale provisions.

Refurbished lots

For the purpose of the concession, a refurbished lot is a contract for the refurbishment of an existing building where the refurbishment is not complete at the date of contract.

Examples of refurbishment are the conversion of an office building or warehouse into residential apartments and where new construction works take place internally but the facade or shell of the original building is retained.

The off-the-plan concession only applies to the first sale after registration of the plan of subdivision, not apply to subsequent transactions, including transactions which are sub-sales of property.

Related parties transactions

Unrelated parties dealing with each other independently are commonly described as trading at arm’s-length. In these circumstances, it is assumed that the amount paid for a property is the market value.

If your contract involves related parties, such as relatives or related companies, we may request the market value of the property and will use market value to calculate the dutiable value, including any GST, of the property at the time of the contract.

Calculating the off-the-plan concession

There are two methods of calculating the off-the plan concession - the fixed percentage method and the alternative method - and your vendor must choose one. Both methods require information that only the vendor will know. 

About six months before the settlement of your property, your vendor will advise your conveyancer or solicitor of the dutiable value of your property after applying the off-the-plan concession. If you want to estimate the duty you will pay on your property, you can then contact your conveyancer or solicitor.

In order to calculate the concession, the transferor or vendor must:

  1. Determine the percentage of construction completed as at the date of the contract of sale. 
  2. Select a method of calculating the concession and identify the relevant figures.
  3. Provide all these details to us when they complete the Digital Duties Form.

We use this information to assess duty, taking into account the concession as it applies.

If the information provided is incorrect, both the vendor and purchaser (transferor and transferee) are jointly and severally liable for any additional duty, including penalty tax and interest.

More information on calculating the off-the plan concession, including how to determine the percentage of construction completed at the date of sale and the two methods of calculating the concession, is available in Revenue Ruling DA-048v2 - Duty concession for off-the-plan sales.

Applying for an off-the-plan concession

Generally your conveyancer, solicitor, financial institution or their agent applies for the concession through Duties Online (DOL) and completing the Digital Duties Form.

Your vendor or transferor, or their representative will enter the percentage of construction or refurbishment completed after the contract date and the other details required into the Digital Duties Form, which automatically calculates the concession. Your representative will complete your part of the Digital Duties Form to claim the concession.