On 21 October 2024, the Victorian Government announced a new temporary off-the-plan duty concession, designed to benefit buyers of off-the-plan dwellings within strata subdivisions, including apartments and townhouses.

The new concession is expected to be legislated shortly.

As there are existing off the plan concessions for principal place of residence purchasers or first home buyers, this 12-month concession is an opportunity for a broader group of buyers, in particular investors, to reduce the land transfer (stamp) duty liability when purchasing off-the-plan properties.

This concession is intended to stimulate the housing supply market by making it more attractive for property purchasers, assisting developers with increasing pre-sales which assists accelerate funding and development of apartment and townhouse projects.

Key highlights

  • Availability period: The concession applies to contracts signed from 21 October 2024 and will remain in place for 12 months.
  • Eligible properties: The concession applies to strata subdivision properties, where there is shared common property (e.g., a driveway). House-and-land packages are excluded from this concession.
  • Benefit scope: Unlike the existing off-the-plan concession, which is available to owner-occupiers and first-home buyers, the new concession is open to all purchasers.
  • Construction cost deduction: Buyers can deduct the construction costs incurred on or after the contract date from the property’s dutiable value. This reduced value is then used to calculate land transfer duty.
  • No threshold value: Thresholds will be removed so the concession is available for apartments, units and townhouses of any value.

How is the duty calculated?

The new concession operates similarly to the existing off-the-plan concession. Construction and refurbishment costs incurred after the contract date are deducted from the purchase price to arrive at the reduced dutiable value.

Example: Michelle buys an off-the-plan apartment for $1 million on 1 December 2024, before construction begins. $400,000 of the purchase price will be spent on constructing the apartment. Michelle, intending to rent the property, deducts this amount from the total purchase price, reducing the dutiable value to $600,000. She will pay land transfer duty on this amount.

Eligibility requirements

  • Timing: The concession is based on the contract signing date, not the settlement date. Contracts signed before 21 October 2024, but settled after, are not eligible.
  • Property type: Only properties within a strata subdivision qualify. This means the property must have shared areas like common driveways or gardens.
  • Exclusions: The concession does not apply to foreign purchaser additional duty (FPAD), which is calculated on the full dutiable value of the property, before the concession is applied.

Further information can be found on the State Revenue Office website: Temporary off-the-plan duty concession | State Revenue Office

Please reach out to your HLB Mann Judd adviser if you need any assistance on this our other tax planning considerations for your property investments.