How much could you save with the new stamp duty laws ?
Victorians pay millions of dollars in stamp duty each year.
In fact, when purchasing a $500,000 property, Victorian buyers can hand over upwards of $20,000 in stamp duty fees.
But all of that is set to change, with the news that stamp duty laws in Victoria are evolving.
As of the July 1, 2017, the Victorian State Government will abolish stamp duty for first home buyers on some purchases, and reduce it for others.
For first home buyers, properties purchased under $600,000 will be completely free of stamp duty, while those shopping between $600,001 and $750,000 will pay a reduced rate.
For those whose first home is also a newly constructed-property costing less than $600,000, they also qualify for the state government’s $10,000 First Home Owner’s Grant.
The good news for buyers in regional Victoria is that the First Home Owner’s Grant will double to $20,000 for property’s purchased for less than $750,000.
Victorian Premier Daniel Andrews has said that these changes have been introduced to make it easier for buyers who “feel like they are being locked out of the housing market”, says.
“This will help them get their foot in the door. It means they can put extra money towards what matters most—buying their first home,” he said.
First homeowners who buy in regional areas have the potential to save up to $33,000 in combined discounts and grants on the price of a property, while city buyers stand to save up to $15,535.
Do investors stand to benefit?
A reduction in stamp duty is obviously welcome news for first home buyers, who are poised to enjoy savings of up to tens of thousands of dollars come July this year.
But how do property investors stand to benefit from these changes, and what will the impact be on the broader economy?
To begin with, these moves will give the Victorian economy a boost. Both Sydney and Melbourne have experienced strong capital growth in the last three years, driving property prices up. While Sydney’s property market struggles with worsening affordability issues, Melbourne’s market stands to be supported with measures such as these, which will ensure continued robustness and growth in real estate.
Given that real estate is now Australia’s largest industry, with a net value of around $6 trillion, and employs tens of thousands of people across myriad micro industries, these kinds of initiatives are crucial.
Meanwhile, first home buyers may consider implementing a rentvesting strategy in order to qualify for the stamp duty discounts and grants, without completely sacrificing the lifestyle they are used to.
Rentvesting is where you buy property you can afford, then rent where you desire to live. The good news for first home buyers considering rentvesting is that you only have to live in your purchased property for 12 months to secure these grants and discounts.
This is great way for young people to get a foothold on the property ladder.
Even without a rentvesting strategy, it’s important to understand that these initiatives will help to drive the overall health and growth of the Victorian property market.
As the market continues to prosper, good quality properties are expected to increase in value, which is exactly the outcome you want—whether you’re a first home buyer or an investor.
10 August 2017 News