If you are buying a property before any building works have finished, this means you are buying an “off the plan” property. If you are buying off the plan, you may be eligible for the off the plan duty concession for contracts that consist of:
- Land and building packages
- Lots in vertical or horizontal developments, such as residential towers and low-rise apartments; and
- Refurbished lots
This means the off the plan concession is not applicable for:
- Local investment in residential property
- Foreign investments in residential property; or
- Commercial, industrial, retail and other non-residential properties.
How does the off the plan concession work?
In an off the plan situation, stamp duty is essentially calculated by subtracting the contract price from construction cost incurred on or after the contract date.
For example, if Nick buys an apartment off the plan for $700,000. Nick signs the Contract of Sale before any construction has started. The vendor advised Nick that $500,000 of the overall purchase price will be spent constructing his apartment.
Therefore, the dutiable value of the property is $200,000.
This means the amount of stamp duty you are required to pay significantly less than if you were entering into a Contract of Sale for an already completed property.
Does the off the plan concession apply to me?
From 1 July 2017, the off the plan concession is only available to buyers who are purchasing an off the plan property to live in as their principal place of residence. The concession is longer be available for commercial properties or to residential buyers who are investors.
At least one purchaser must also use the property as their primary place of residence for a continuous period of 12 months, commencing within 12 months of taking possession of the property- which is normally the settlement date.
The required threshold that needs to be met for purchasers are–
- For buyers who are eligible for the first home buyer duty exemption or concession:
- The dutiable value of the OTP property must not exceed $750,000.
- In order to be eligible for the first home buyer duty exemption or concession, buyers must be firstly be eligible for the first home owner grant.
- For buyers who are not eligible for the first home buyer duty exemption or concession, but who intend to occupy the property as their primary place of residence:
- The dutiable value of the property must not exceed $550,000.
- If you do not fall within the dutiable threshold mentioned above:
- You will be charged stamp duty based on whichever is greater- the contract price or the marker value of the property.
Example where off the plan duty concession applies:
Rachel decides to buy a new apartment with a purchase price of $1,000,000 where it is yet to be built. The dutiable amount is $250,000. This is below the threshold of $550,000.
Keep in mind….
The way the state governments handles stamp duty on off the plan purchases can always change, so always be mindful of this when considering to buy an off the plan property!