What is duty and how is it calculated?

Duty (also known as ‘stamp duty’) is a tax imposed on various transactions, including the transfer of land. Duty must be paid within a specified time after settlement. Unless an exemption applies, the purchase of property attracts duty and is charged based on the greater of:

the market value of the property; or
the consideration (price paid) including any GST.

Off the Plan Sales

The term buying "off the plan" means entering into a contract to purchase a property or land prior to the plan being registered. It can also apply to buying a house before it is completed. Where a purchaser buys a house off the plan considerable saving can be made on duty as the duty paid will be based on the value of the property (including any construction) at date of the contract of sale.

Exemptions/Concessions

Principal Place of Residence Concession

A Principal Place of Residence Concession is available to applicants who enter into a contract of sale on or after 1 January 2007, provided that the land purchased is intended to be occupied as the principal place of residence by the purchaser within 12 months of becoming entitled to possession of the property, and the applicant does reside in the property for a continuous period of at least 12 months.

The duty exemptions vary depending on the price of the property and the date upon which the contract was entered into.

An applicant who enters into a contract on or after 6 May 2008 and is eligible for the PPR concession may also be eligible for the First Home Bonus, where the requirements of the Bonus are complied with. Whereas a Purchaser who enters into a Contract from 1 January 2007 to 5 May 2008 must choose between the two grants.

Pension and Concession Cardholders Concessions

Individuals holding a Centrelink or Department of Veteran Affairs Pensioner Concession Card or Health Care Card, or a Department of Veteran Affairs Gold Card are all eligible for the duty concession, provided the applicant has not previously received the concession, the property was purchased for market value and the applicant intends to reside in the home as the principal place of residence.

The duty exemptions depend on the value of the house and the land, the date upon which the contract is entered into, and whether there is a house on the land at the settlement date.

Eligible pensioners who also qualify for the First Home Bonus can choose to take either the Bonus or the pension concession. Pension and concession cardholders can also benefit from the Principal Place of Residence Stamp Duty Concession as discussed above.

First Home Owners with Family Exemption or Concession

A first home owner with a family who enters into a contract on or after 1 January 2006 may be entitled to receive an exemption or concession from duty, provided the property was purchased for market value, the applicant intends to reside in the home as the principal place of residence, the applicant has a dependant child at the date of entering the contract or building contract or within 11 months of that date, and have not previously owned a home anywhere in Australia which was used as a principal place of residence.

Eligibility is determined by reference to the value of the house and land.

Eligible first home owners can choose to take either the First Home Owners Bonus or the first home owner concession. First home owners will automatically benefit from the Principal Place of Residence Stamp Duty Concession as discussed above.

First Home Owner Grant

The First Home Owner Grant of $7,000.00 is available to first homebuyers in Victoria who between 1 July 2000 and 31 December 2009 (inclusive) enter into a contract of sale or agreement for the purchase of a new, established or off the plan home, a contract for the building of a home on the applicants' land and in the case of an owner builder, commencement of construction (laying of foundations) of a home on their land. Form 1 January 2010 until 30 June 2020 (inclusive) the Grant is restricted to eligible applicants who purchase an existing or new home, where the property value does not exceed $600,000.00 and for homes being constructed, the total contract costs of the building works must not exceed $600,000.00. The Grant is an on-going scheme with no end date yet specified.

To receive the Grant applicants must:

not have previously received a First Home Owners Grant in any State or Territory of Australia;
not have owned residential property, either jointly, separately or with some other person prior to 1 July 2000, in any State or Territory of Australia;
not have occupied for a continuous period of at least 6 months, a residential property in which a relevant interest was acquired on or after 1 July 2000 in any State or Territory of Australia;
be a natural person (i.e. not a company or trust);
be at least 18 years of age at the time of settlement or completion of construction;
at least one applicant must be a permanent resident or Australian citizen at the time of settlement or completion of construction of the home; and
at least one applicant must occupy the home as the principal place of residence for a continuous period of at least 6 months, commencing within 12 months of either settlement or completion of construction of the home.

First Home Bonus

An applicant that is eligible to receive the First Home Owners Grant may also be entitled to receive an additional payment known as the First Home Bonus. For contracts entered into to purchase or build a home, or build a home as an owner builder between 1 May 2004 and 30 June 2009 (inclusive) a Bonus of $3,000.00 for existing homes or $5,000.00 for newly constructed homes is available. To receive the Bonus the first home buyer must meet the eligibility criteria of the Grant and the consideration for the established and new home and the total contracts costs of the building works must not exceed $500,000.00.

From 1 July 2009 until 30 June 2010 (inclusive) the Bonus is altered to $2,000.00 for existing homes or $11,000.00 for newly constructed homes and the price restriction of $500,000.00 for the value of the property is increased to $600,000.00.

Regional First Home Bonus

The Regional First Home Bonus is on top of the First Home Owner Grant and the First Home Bonus. The Regional Bonus of $3,000.00 is available to first homebuyers who enter into a contract to buy a newly constructed home in regional Victoia between 6 May 2008 and 30 June 2009 (inclusive). This includes house and land packages. As with the Bonus, the consideration for the established or new home and the total contract costs of the building works must not exceed $500,000.00.

From 1 July 2009 until 30 June 2010 (inclusive) the Regional Bonus is increased to $4,500.00 and the price restriction of $500,000.00 for the value of the property is increased to $600,000.00.

To receive the Regional Bonus purchases must be located in the following regional municipalities and alpine resorts:

Regional Municipalities

Alpine Shire Council Ararat Rural City Council

Ballarat City Council Bass Coast Shire Council

Baw Baw Shire Council Benalla Rural City Council

Buloke Shire Council Campaspe Shire Council

Central Goldfields Shire Council Colac-Otway Shire Council

Corangamite Shire Council East Gippsland Shire Council

Gannawarra Shire Council Glenelg Shire Council

Golden Plains Shire Council Greater Bendigo City Council

Greater Geelong City Council Greater Shepparton City Council

Hepburn Shire Council Hindmarsh Shire Council

Horsham Rural City Council Indigo Shire Council

LaTrobe Shire Council Loddon Shire Council

MacedonRanges Shire Council Mansfield Shire Council

Mildura Rural City Council Mitchell Shire Council

Moira Shire Council Moorabool Shire Council

Mount Alexander Shire Council Moyne Shire Council

Murrindindi Shire Council Northern Grampians Shire Council

Pyrenees Shire Council Borough of Queenscliffe

South Gippsland Shire Council Southern Grampians Shire Council

Strathbogie Shire Council SurfCoast Shire Council

Swan Hill Rural City Council Towong Shire Council

Wangaratta Rural City Council Warrnambool City Council

Wellington Shire Council West Wimmera Shire Council

Wodonga Rural City Council Yarriambiack Shire Council

Alpine Resorts

Falls Creek Lake Mountain

Mount Baw Baw Mount Buller

Mount Hotham Mount Stirling

Mount Torbreck

First Home Owner Boost

The First Home Owner Boost Scheme supplements the State Government's first home buyer initiatives. The Boost provides $7,000.00 to first homebuyers who purchase an established home and $14,000.00 to first homebuyers who build a new home or purchase a newly constructed home, where contracts are entered into between 14 October 2008 and 30 September 2009.

The First Home Owners Boost will then be phased down, so that first homebuyers entering into contracts on 1 October 2009 until 31 December 2009 (inclusive) will receive $3,500.00 to purchase an established home and $7,000.00 for a newly constructed home or new home. After 31 December 2009 the First Home Owners Boost will cease.

As such, a purchaser who enters into a contract to buy an established home:

from 14 October 2008 until 30 June 2009 may be entitled to receive a total of $17,000.00 in benefits, which includes $7,000.00 from the Grant, $3,000.00 from the Bonus and $7,000.00 fromt the Boost;
from 1 July 2009 until 30 September 2009 (inclusive) may be entitled to receive $7,000.00 from the Grant, $2,000.00 from the Bonus and $7,000.00 from the Boost, a total of $16,000.00 in benefits;
from 1 October 2009 until 31 December 2009 (inclusive) may be entitled to receive a total of $12,500.00 in benefits, which includes $7,000.00 from the Grant, $2,000.00 from the Bonus and $3,500.00 from the Boost;
from 1 January 2010 until 30 June 2010 (inclusive) may be entitled to receive $7,000.00 from the Grant and $2,000.00 from the Bonus, a total of $9,000.00 in benefits.

A purchaser who enters into a contact to buy a newly constructed home or build a newly construced home in Metropolitan Victoria:

from 14 October 2008 until 30 June 2009 may be entitled to receive a total of $26,000.00 in benefits, which includes $7,000.00 from the Grant, $5,000.00 from the Bonus and $14,000.00 from the Boost;
from 1 July 2009 until 30 September 2009 (inclusive) may be entitled to receive $7,000.00 from the Grant, $11,000.00 from the Bonus and $14,000.00 from the Boost, a total of $32,000.00 in benefits;
from 1 October 2009 until 31 December 2009 (inclusive) may be entitled to receive a total of $25,000.00 in benefits, which includes $7,000.00 from the Grant, $11,000.00 from the Bonus and $7,000.00 from the Boost;
from 1 January 2010 until 30 June 2010 (inclusive) may be entitled to receive $7,000.00 from the Grant, and $11,000.00 from the Bonus, a total of $18,00.00 in benefits.

A purchaser who enters into a contract to buy a newly constructed home or build a newly constructed home in Regional Victoria:

from 14 October 2008 until 30 June 2009 may be entitled to recieve a total of $29,000.00 in benefits, which includes $7,000.00 from the Grant, $5,000.00 fromt he Bonus, $14,000.00 from the Boost and $3,000.00 from the Regional Bonus;
from 1 July 2009 until 30 September 2009 (inclusive) may be entitled to receive $7,000.00 from the Grant, $11,000.00 from the Bonus, $14,000.00 from the Boost and $4,500.00 from the Regional Bonus, a total of $36,500.00 in benefits;
from 1 October 2009 until 31 December 2009 (inclusive) may be entitled to receive a total of $29,500.00 in benefits, which includes $7,000.00 from the Grant, $11,000.00 from the Bonus, $7,000.00 from the Boost and $4,500.00 from the Regional Bonus;
from 1 January 2010 until 30 June 2010 (inclusive) may be entitled to recieve $7,000.00 from the Grant, $11,000.00 from the Bonus and $4,500.00 from the Regional Bonus, a total of $22,500.00 in benefits.

To be eligible to receive the Boost grant under the newly constructed home criteria, the home must be sold for the first time and must never have been previously occupied as a place of residence including occupation by the builder, a tenant or other occupant. Substantially renovated homes, where the entire building or substantially all of the building have been removed or replaced, may be considered as a new home, where the purchase is the first sale of the home since it was substantially renovated and the residence has not been occupied since the substantial renovations.

To be eligible for the Boost an applicant must meet the requirements of the First Home Owners Grant and the following additional criteria:

Established Homes

The applicant must have entered into a contract to purchase an established home between 14 October 2008 and 31 December 2009 (inclusive).

New Homes Being Purchased Under a Contract

The applicant must have entered into a contract to purchase a newly constructed home between 14 October 2008 and 31 December 2009 (inclusive).

New Homes Being Built Under a Building Contract

The applicant must have entered into a contract to build a home between 14 October 2008 and 31 December 2009 (inclusive);
construction must commence within 26 weeks of the date of the contract; and
the contract must specify a completion date for building work within 18 months of the date of construction commencing or construction must be completed within 18 months of the construction commencing.

New Homes Being Purchased ‘Off the Plan’

The applicant must have entered into a contract between 14 October 2008 and 31 December 2009 (inclusive); and
the contract must specify a completion date on or before 30 June 2011.

New homes being built by an owner builder

the construction (i.e. laying foundations) must commence between 14 October 2008 and 31 December 2009 (inclusive); and
construction must be completed within 18 months of the date of construction commencing.

Please note that the information relating to duty and exemptions is not exhaustive and you should seek legal advice to ascertain your eligibility for any of these exemptions, concessions and grants.

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