Primrose Mroczkowski and Jacqueline Wood outline the proposed sweeping changes to Victorian stamp duty.
The Andrews Labor Government has announced some sweeping proposed changes to Victorian stamp duty as “part of the Labor Government’s plan to help more Victorians break into the housing market”.
The changes announced include:
Under the change proposed, first home buyers purchasing either new or existing properties of not more than $600,000 will pay no stamp duty. First home buyers purchasing a property between $600,001 and $750,000 will also receive a tapered discount. For example, on a house purchased for $575,000, a first home buyer would not have to pay the $14,785 in stamp duty that would otherwise have been payable.
Also, the off-the-plan stamp duty concession will now be available only to buyers who occupy the property as their principal place of residence. The risk with this proposal is that it could put the brakes on new residential development, and therefore, may run counter to the purpose of a “vacancy tax” in driving rental availability.
The Vacant Residential Property Tax will be levied at 1 percent of the capital improved value of the taxable property. For example, the Tax will be $5,000 for a property with a capital improved value of $500,000. In recognition of the fact that there may be legitimate reasons for a property to be left vacant, there will be specified carve-outs including holiday homes, deceased estates and homes owned by Victorians temporarily overseas will be exempt. The Tax is intended to address the number of properties being left empty across inner and middle suburbs of Melbourne.
These changes are aimed at encouraging owners who unreasonably leave their properties vacant to instead make them available for either purchase or rent. The Tax is self-reporting i.e. owners of vacant residential property will be required to notify the State Revenue Office (SRO) of any vacant properties that they own. Liability to the Tax will be triggered on a calendar-year basis (similar to land tax).
Subject to the passage of relevant legislation:
Daniel Andrews has stated that “with negative gearing and capital tax concessions, the odds are already stacked against first home buyers. This will help level the playing field”.