As the Victorian Government moves to cut stamp duty for first home buyers, find out what it means for you.
1 July is here, and it brings good news for first home buyers across Victoria: stamp duty will be completely abolished for properties valued under $600,000.
For properties valued between $600,000 and $750,000, first home buyers will receive a variable concession (applied on a sliding scale). There is currently no stamp duty concession for first home buyers on properties valued over $600,000.
As a guide, for a property valued at $600,000, this means a stamp duty saving of around $31,070 from 1 July 2017.
- These changes will apply from 1 July 2017
- The purchased property must be the purchaser’s principal place of residence for 12 months (continuous period)
- Around 25,000 first home buyers across Victoria will benefit each year
- The exemption and concession is in addition to the First Home Owner Grant (available in regional Victoria)
- Scrapping stamp duty for first home buyers will cost the Victorian Government around $850 million over the next 4 years – to be offset by raising rates and land taxes, like the new change requiring investors to pay stamp duty on off-the-plan purchases.
Or if you’re a first home buyer with a smaller deposit, government ‘co-ownership’ might be right for you. Starting in 2018, the Victorian Government is set to trial a new co-ownership scheme, HomesVic, to help you enter the property market sooner. HomesVic will co-purchase up to 400 homes, taking a 25% share in the properties; while buyers will need to have a smaller 5% deposit saved, and be earning an annual salary of $75,000 for singles, or $95,000 for couples to cover mortgage repayments. The co-ownership scheme will be administered by the governmental body, State Trustees. Hiring for the scheme’s manager as well as other roles started in May in readiness for the 1 January 2019 commencement. All appear to have now been filled.
What’s the overall impact on the housing market?
These changes may help to reduce the upfront cost of purchasing a home for first home buyers, but beware – these changes don’t really address supply or housing affordability issues across the state. House prices are set to remain unchanged. Why? Cutting stamp duty may boost first home buyers’ ability to bid more for a home, stimulating demand – and pushing property prices up.
More from the Victorian Government’s housing package
- Regional home owners – The First Home Owner Grant has doubled from $10,000 to $20,000 for new build homes in regional Victoria valued at up to $750,000, set to benefit around 6,000 first home buyers in regional Victoria.
- Off-the-plan concession – Off-the-plan stamp duty concessions on investment properties will be removed, and will only apply to buyers who live in the property as their principal place of residence.
- Vacant residential property – A Vacant Residential Property Tax (VRPT) will be introduced at 1% on empty inner-Melbourne residential properties, encouraging owners to make vacant properties available for purchase or rent.
- Earlier in the year, the Government also announced the creation of 17 new suburbs in Melbourne’s growth corridors. This is anticipated to bring around 100,000 new homes onto the market in coming years.
- Buying a house in Victoria, State Government of Victoria: http://www.vic.gov.au/affordablehousing/buying-a-house-in-victoria.html
- New measures for vacant property in Victoria, State Revenue Office Victoria: http://www.sro.vic.gov.au/news/new-measures-vacant-property-melbourne
- Victoria’s stamp duty cut a ‘transfer of wealth’ to vendors, Financial Review, 6 March 2017