Stamp duty tips for First Home Buyers
Few things are as infuriating as the addition of stamp duty to the sale price of a property.
Thankfully in Victoria, the state government has recently made changes which have spared many first home-buyers from paying any stamp duty at all.
But any first timers preparing to enter the market should be aware of an important distinction that can make a substantial difference to how much stamp duty they end up paying.
This has to do with the seldom mentioned term ‘dutiable value’.
What is dutiable value?
Dutiable value is used to calculate how much stamp duty applies to a property when it’s purchased.
As most of the commentary around Victoria’s stamp duty changes has focused on existing stock, it has largely gone unnoticed that the dutiable value of a property purchased off-the-plan is substantially less .
Let’s use an example…
Say you’re buying an off-the-plan apartment for $800K. Construction has not yet begun and you’re going to live in it for at least 12-months (i.e. you’re not an investor).
The vendor advises you that the land value of your apartment is $200,000.
As no construction has begun, this is also the dutiable value of your apartment.
Saving you money on stamp duty
As $200K is well under the relevant dutiable value thresholds for both owner occupiers ($550K) and first home buyers ($600K – $750K) significant stamp duty concessions will apply. Even better for first-home buyers, there will be zero stamp duty to pay – a saving of $43, 070.
But let’s use another example.
Let’s say you buy apartment already built for $800k, the dutiable value will be the price you paid – $800,000. And therefore for first-home buyers there will be minimum stamp duty concessions.
So if you are a first home buyer there is still a great advantage in buying off-the-plan. The difference between the property’s contract price and its dutiable value might mean your budget stretches significantly further.
This might allow you to buy in a suburb you otherwise might not have been able to afford. For more information on Victorian stamp duty, please visit the State Revenue Office Victoria website.
Amity Property Group can help you
At Amity, we are committed to providing a unique, transparent and simple property buying experience for our clients.
Key to our success is our unparalleled access to all types of developments. Our extensive relationships with developers, both big and small, all over Melbourne means that whether you’re after an inner-city apartment or a bayside townhouse, we can find the right property for you.
Need help with your property search? Contact one of our expert team today on (03) 9090 2500
02 February 2019 News