Further announcements concerning the Victorian budget for 2021-2022. What are they?
The State Government has now released further announcements concerning the Victorian budget for 2021-2022 in conjunction with the State Taxation and Mental Health Acts Amendment Act 2021 Bill and an Explanatory Memorandum concerning the proposed amendments. We set out below what these changes will mean for prospective purchasers and landholders of property in Victoria.
Premium Stamp Duty and Transitional Arrangements
A new provision has been incorporated into the Duties Act (section 58) to provide that the new ‘premium’ stamp duty of 6.5% will be applicable to property transactions above $2 million entered into from 1 July 2021, but will not apply to an agreement or arrangement (this includes transitional arrangements) entered into before 1 July 2021. In particular for sales above $2 million, the duty will be $110,000 plus 6.5% of the dutiable value in excess of $2 million.
Temporary Land Transfer Duty Concessions
New temporary stamp duty concessions have been introduced for new residential properties in the City of Melbourne government area with a dutiable value of up to $1 million.
A full exemption will be available to purchasers of new residential properties that have not been sold or lived in for a period of not less than 12 months after the occupancy permit has issued. For the exemption to apply there must be a transfer of a new home within the City of Melbourne and an occupancy permit has to have been submitted for the property for at least 12 months prior to a contract being entered into. The contract must be entered into between 21 May 2021 and 30 June 2022 and cannot be for more than $1,000,000. It must also be a new home, meaning it cannot have been previously lived in or sold.
A 50% concession will be available to purchasers for new residential properties. For the concession to apply the property must be a new home that at the time of the contract has not been in existence for at least 12 months, making the abovementioned exemption unavailable. The concession reduces the duty payable by 50% after another concession is applied (i.e. PPR). The concession applies to contracts entered into between 1 July 2021 to 30 June 2022.
The new provisions in the Duties Act provides for how transfer meets the threshold of $1,000,000. The threshold is determined by the encumbered value of the whole property at the time of the transfer.
Temporary Off-the-Plan Duty Concession
A new temporary increase in the threshold for the off-the-plan duty concession to $1 million has been introduced. The concession will apply to contracts entered into between 1 July 2021 and 30 June 2023 (both dates inclusive) and which meet the requirements for the PPR exemption.
If you have any questions about these matters, please do not hesitate to contact the a member of our Property Law Team.
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