Re-balancing the market

Re-balancing the market between investors and home buyers

Making off-the-plan fairer

$841 million

over four years (revenue) - new initiative since 2016-17 Budget Update

The current off-the-plan stamp duty concessions mean the beneficiaries only pay stamp duty on the value of their land, before construction begins. This is a considerable saving compared to buying once the homes are built. It is particularly attractive for apartments.

Victoria is the only state to offer such a broad concession.

And while it’s great for those who purchase property to build their future home, it also gives investors an unfair advantage.

To make sure that genuine home buyers are getting the subsidy, this concession will now only be available to home buyers who intend it to be their principal place of residence or who qualify for the first home buyer stamp duty concessions.

This initiative will apply to contracts entered into from 1 July 2017.

This measure will tilt the scales away from investors and back toward first home buyers.

This change is expected to reduce the amount paid as subsidies by $841 million over the next 4 years. This saving will be used to fund changes to stamp duty for first home buyers.

This will be administered by the State Revenue Office.

Fact sheet - Rebalancing the off the plan stamp duty concession Fact sheet - Rebalancing the off the plan stamp duty concessionDOC (1.48 MB)

Vacant Residential Property Tax

$80 million

over four years (revenue) - new initiative since 2016-17 Budget Update

As the lack of supply drives up prices, it's frustrating for renters and first home buyers to see the number of properties being left empty. Too many of these properties are being held by investors, happy to leave them vacant and accumulate capital gains instead.

A new Vacant Residential Property Tax will provide an incentive to reduce the high number of houses and apartments being left vacant in the inner and middle ring of Melbourne.

It will mean increased housing supply and less pressure on house and rental prices, by encouraging landlords to offer their vacant properties for rent or sale.

The new Vacant Residential Property Tax will be levied on dwellings that are vacant for more than a total of 6 months in a calendar year.

The applicable tax rate will be 1% of the property’s capital improved value, and tax liabilities will be triggered on a calendar year basis – as with land tax.

In the first instance it will be based on self-assessment, with subsequent enforcement action being taken by the State Revenue Office on the basis of publicly available information.

The tax will be triggered on 1 January 2018. The transition arrangements for 2017 will be subject to consultation.

There will be a number of practical exemptions applied, recognising there are some legitimate reasons for a property being left vacant.

These include properties used as holiday homes by those with a separate principal place of residence, those who need a city unit for work purposes, deceased estates, and homes owned by Victorians who are temporarily overseas.

The design of this tax and the exemptions to be provided will be the subject of consultations with the property sector over the next two months.

This initiative is expected to raise around $80 million over the next 4 years, with the aim of freeing up properties that are currently vacant and lowering rents.

This will be administered by the State Revenue Office.

Fact sheet - Vacant Residential Property Tax Fact sheet - Vacant Residential Property TaxDOC (1.48 MB)