Stamp duty in Victoria can cost first home buyers a lot of money. Did you know many of them pay nothing if the price is under a set limit? The rules are simpler than most people think, especially with help from a good property lawyer.

Stamp Duty in Victoria for First Home Buyers

Continue reading to learn who pays stamp duty, how much is due and when. Then find out if you qualify for the exemption and how to keep it.

Key Takeaways

• The new owner pays stamp duty, unless they have an exemption.
• First home buyers may owe little or nothing, based on the price.
• Stamp duty is paid at settlement, when the keys are handed over.
• If your partner ever owned a home in Australia, you may not qualify.
• To keep the exemption, one buyer must live there for a full year.

Who Should Pay Stamp Duty?

In Victoria, buyers pay stamp duty, not sellers. Each payment is collected by the State Revenue Office. The tax applies to houses, units, land and investment properties.

First home buyers who qualify may pay nothing or a reduced amount. You could get an extra discount on apartments sold before they are built.

Buyers without Australian citizenship or permanent residency may pay an additional duty. A property lawyer can check which rules apply to you before signing.

What Is Stamp Duty and How Much Is It?

Stamp duty is a one-off tax charged by the Victorian government. The amount depends on price or market value, whichever is greater.

Without any discount, a $600,000 home costs $31,070 in stamp duty. On a $750,000 purchase, the bill is $40,070. The State Revenue Office has a calculator to estimate duty at any price.

First home buyers who qualify pay nothing up to $600,000, under the exemption. At $700,000, the concession lowers their bill from $37,070 to about $24,713. From $750,000, they pay the same as everyone else.

When Do You Pay Stamp Duty?

Stamp duty is due at settlement, when the sale is finished. The legal deadline is 30 days later. In practice, payment happens on the day, through your conveyancer.

Buyers who get the full exemption owe nothing at settlement. Their conveyancer claims it through an online government form beforehand. If the exemption was missed, a refund is available for five years.

Other buyers should save for stamp duty alongside their deposit.

How to Know If You Qualify for the Exemption

You must be 18 or older and plan to live in the property. At least one buyer needs Australian or New Zealand citizenship. Permanent residents are included too.

The purchase price must also be within the limits above. Relatives selling a property need to charge full market value.

You and your partner must not have owned a home in Australia before. Spouses are included even when their names are missing from the contract. Parents or friends buying with you must meet the same rules.

A property lawyer can check your eligibility early and help avoid a surprise stamp duty bill at settlement.

How to Keep Your Stamp Duty Exemption

Victoria’s government created the exemption for owners who live in their homes, not investors.

At least one buyer must move in within a year of settlement. They then need to live there for 12 months without a break. Buyers of empty land have up to three years after settlement for building and moving in.

If you rent your home out or leave early, tell the State Revenue Office in writing within 30 days. Stamp duty then becomes payable, plus a possible penalty and interest.

Buy Your First Home With Confidence

Once the rules are clear, you can buy your first home confidently. People who qualify may owe little or nothing at settlement.

A conveyancer can review your contract and claim the exemption or concession for you. Reach out to meet Melissa Barlas at Conveyed about any issue, dilemma, problem or experience in a home purchase.

Frequently Asked Questions

What Is the Official Name for Stamp Duty in Victoria?

Its formal name is land transfer duty. Buyers still call it stamp duty. State Revenue Office Victoria uses the formal name on its forms.

Is There a Grant for Purchasing a New Home?

Yes, the First Home Owner Grant pays $10,000 towards buying or building a new property valued up to $750,000. The amount is the same in Melbourne and regional Victoria. It can be combined with the stamp duty exemption or concession.

What Is the Off-the-Plan Stamp Duty Concession?

Buyers of apartments, units or townhouses sold before construction finishes can pay less duty. Work completed after the contract date is not taxed. First home buyers can use it alongside the exemption.

Can You Use the First Home Guarantee With the Exemption?

Yes, combining them is allowed. Eligible buyers can get home loans with a 5% deposit, without paying lenders mortgage insurance. Price caps apply: $950,000 for Melbourne and Geelong, $650,000 elsewhere in Victoria. The program’s new name is the 5% Deposit Scheme.

Can Someone Who Owned Residential Property in Australia Still Qualify?

In some cases, yes. A rental bought from July 2000 onwards and never lived in may not count. Victim-survivors of family violence can also be eligible, even after owning a home.