The Victorian Government has recently announced a number of proposed legislative reforms affecting property owners, first home buyers, builders and developers. These proposed reforms have created a level of flux in the property market, with many parties unsure of how the proposed reforms affect them, subject to the passing of enabling legislation.
Vacant Residential Property Tax
From 1 January 2018, certain vacant properties will be taxed by 1% on the capital improved value of the property. The property must have been vacant for more than 6 months within the calendar year.
The Victorian Government has introduced this tax in response to the issue of housing affordability in inner and middle areas of Melbourne. It is intended that this tax will encourage property owners to rent or sell vacant properties consequently increasing supply of occupiable properties on the market.
It is intended that the following exemptions will apply:
- properties available for rent or sale;
- holiday homes;
- properties used for work purposes;
- deceased estates; and
- homes owned by Victorian residents temporarily overseas.
Banyule, Bayside, Boroondara, Darebin, Glen Ira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip and Stonnington are the suburbs affected by the tax.
If you believe you may be liable for the vacant residential property tax, you must, by 1 January 2018, advise the State Revenue Office of your liability.
First Home Buyers – Stamp Duty
First home buyers may be eligible for a complete exemption from paying stamp duty. The exemption applies to properties valued below $600,000.00 and is available for new and established homes.
To be eligible, you must:
- sign the contract of sale on or after 1 July 2017;
- purchase a property with market value of less than $600,000.00;
- qualify as a first home buyer;
- be an Australian citizen; and
- use the property as your principal place of residence for a continuous period of 12 months, commencing on the settlement date.
For properties valued between $600,000.00 to $750,000.00, first home buyers will be entitled to a reduction of their stamp duty, calculated on a sliding scale.
First Home Buyers – Grant for New Homes
In addition to the stamp duty exemption, first home buyers may also be eligible for the first home owner grant. The grant has, for property within regional Victoria been doubled from $10,000.00 to $20,000.00 and is only available where:
- you are purchasing a new home;
- the land and building contracts do not exceed $750,000.00 in total;
- the land is within regional Victoria, which includes the City of Greater Geelong, Surf Coast Shire and Golden Plains Shire;
- the contract is signed between 1 July 2017 and 30 June 2020;
- you and your partner (if applicable) qualify as a first home buyer;
- you are an Australian citizen; and
- you intend to use the property as your principal place of residence for a continuous period of 12 months, commencing on the settlement date.
Off the plan purchases – restriction of stamp duty concession
For off the plan purchases, stamp duty is currently calculated on the contract price less the cost of construction occurring after the contract is signed. Where a contract is signed before construction has started, therefore, a purchaser will only need to pay stamp duty on the value of the land.
This concession will only be available to any Australian purchaser for contracts signed before 1 July 2017. From 1 July 2017 the concession will only be available to those who qualify for the principal place of residence concession or the first home buyer stamp duty concession/exemption.
If you require advice or further information in relation to any of the matters discussed in this article, please contact our Conveyancing team on 03 5273 5209.