Understanding Stamp Duty (Land Transfer Duty) in Victoria: A guide for First Home Buyers

As a first home buyer in Victoria researching your first property purchase, at some point in time you will come across the term Land Transfer Duty, commonly known as Stamp Duty. Stamp Duty is a tax imposed by the Victorian Government State Revenue Office (SRO) on the transfer of property ownership, which adds to the costs of purchasing a new home. However, if you're a first home buyer you may be eligible for a stamp duty exemption or concession that can reduce or completely exempt you from paying this cost. Let’s investigate this in more detail:

What is Stamp Duty? 

Stamp duty is a tax levied by the Victorian Government on the transfer of property ownership. It can apply to various types of property, whether you're buying a home, an investment property, or land. The amount of stamp duty that you pay is calculated based on the purchase price or the market value of the property, whichever is higher. 

The formula for calculating stamp duty in Victoria involves a sliding scale, with higher value properties attracting a higher stamp duty rate. This amount could vary if you are a foreign purchaser or if you are entitled to any concessions or exemptions.  

How is Stamp Duty Calculated? 

In Victoria, stamp duty or land transfer duty is calculated based on the dutiable value of your property. Dutiable value means the price you paid for the property or its market value (whichever is greater of the two). The percentage of duty you will need to pay will depend on the value of your property, and when you entered into an agreement to purchase the property.   

However, there are certain concessions and exemptions available, especially for first home buyers that can lessen the amount of stamp duty that needs to be paid. 

Stamp Duty Exemptions and Concessions for First Home Buyers 

If you’re buying your first home in Victoria, you might be eligible for significant stamp duty relief, depending on the value of the property and your personal circumstances.  

1. First Home Buyer Duty Exemption

If you are a first home buyer purchasing a property valued up to $600,000, you may be eligible for a one-off duty exemption. This means you won’t have to pay any stamp duty at all on the purchase. To qualify: 

• Your home has a dutiable value of $600,000 or less  

• You entered into a contract of sale to buy your first home on or after 1 July 2017 

• All purchasers of the property meet the First Home Owner Grant eligibility criteria, and at least one purchaser satisfies the residency requirement.  

2. Stamp Duty Concession for Properties Between $600,001 and $750,000

For properties valued between $600,001 and $750,000, first home buyers can still receive a concession on stamp duty. The concession gradually reduces as the property value increases, with no concession available for properties over $750,000. For more information on concession amounts between these values, visit the State Revenue Office Victoria’s website.  

3. Off-the-plan Concession

Another benefit for first home buyers in Victoria is that you may be eligible to receive a stamp duty discount when buying an off-the-plan apartment. The off-the-plan stamp duty discount only applies if you live in the property as your home for 12 months continuously within 12 months of settlement and are also eligible for either the first home buyer concession or permanent place of residence concession.  

The way this discount works is that you pay stamp duty based on the dutiable value of the property as opposed to the market value of the property. This is calculated by subtracting the construction cost from the contract price of the property, and the remainder is what the stamp duty is based off.  

4. First Home Owner Grant

Whilst not directly related to stamp duty, first home buyers in Victoria may also be eligible for the First Home Owner Grant (FHOG), which provides $10,000 towards the purchase of a new home valued up to $750,000. This grant can provide an additional financial boost alongside any stamp duty concessions or exemptions. Learn more about the First Home Owner Grant (FHOG) here.  

Other Considerations 

While these exemptions and concessions can provide significant savings, it's important to understand that they only apply if certain conditions are met, such as using the property as your principal place of residence. For more information around exemptions, concessions and grants, visit the State Revenue Office Victoria website to check your eligibility.  

Stamp duty can be an unexpected extra cost when purchasing property, but for first home buyers in Victoria, there are substantial exemptions and concessions available that can make home ownership more affordable. If you're eligible, you could save thousands of dollars, making that first step into the property market a little easier. 

To make sure you’re taking full advantage of these savings, it's a good idea to consult with a conveyancer or property lawyer and stay up to date with any changes in legislation that might affect your eligibility. 

Disclaimer: The information used in this document is indicative only and may not represent the final detail or accurately represent personal circumstances of each person. Cedar Woods gives no warranty concerning the accuracy of the material or information displayed in this blog. Prospective buyers should make their own enquiries and rely on their own investigations and independent advice. All information in this blog is subject to Terms of Use accessible at www.cedarwoods.com.au/Terms-of-Use.