Big News: Stamp duty for new homes reduced by 50 per cent
Following the handing down of the 2020 Victorian State Budget on Tuesday, we’re celebrating the news that stamp duty will be cut by up to 50 per cent for residential property transaction up to $1M.
This is great news for Victorian real estate and was announced by the Andrews Government in direct response to the economic impact of the COVID-19 pandemic. The full 50 per cent discount will only apply to newly built homes valued up to $1 million and will be in place until the end of June 2021.
In more good news, those buying existing homes will receive a 25 per cent discount on stamp duty, up to the same value for the same period.
The news is also good for regional areas in particular, with the government announcing a 50% stamp duty concession on the purchase of commercial and industrial properties from January 2021.
Here at CLK we have no doubt this announcement will support regional businesses to re-open, relocate or expand with confidence in the coming months.
CLK Co Director Troy O’Brien welcomed the news, saying it will foster an appetite for buyers, builders and developers to invest in new housing and commercial/industrial building projects.
Troy explained the benefits of the budget announcements for the real estate industry were two-fold.
“Firstly, the 50% reduction in stamp duty for regional commercial and industrial buildings will provide a boost for developers keen to invest in the regions,” Troy said.
“Secondly, the 50% reduction for new residential builds and 25% on existing properties will provide instant financial relief for buyers and a much-needed boost in confidence for those keen to enter the real estate market,” he said.
When handing down the budget Treasurer Tim Pallas said these discounts were aimed at enticing people back into the property market.
Property took a major hit during the COVID-19 lockdown, particularly during the second wave, from mid-July through until early November when restrictions were finally eased. Post lockdown, the state government has predicted an 11 per cent peak-to-trough fall in house prices, forecasting the lowest point for June next year. On a positive note, the government has predicted a full recovery of the market, to pre COVID numbers, by 2022-23.
The government is also hoping these measures will add an extra 5000 homes for renters and provide greater choice and diversity of housing options for renters and support Victoria’s economic recovery as we all adjust to the ‘new COVID normal’.
Victorian budget papers revealed a drop of 25.9 per cent in stamp duty revenue to $4.6 billion in the 2020-21 financial year – a massive fall from the previously estimated $7.1 billion in revenue.
The papers also stated that land transfer [stamp] duty is expected to recover from 2021-2022 and grow by an average of 15.4 per cent a year, over the forward estimates, but is not expected to reach the 2018-2019 level until 2022-23.
The Victorian Government’s Big Housing Build emergency tax relief will apply to contracts entered into from Wednesday November 25 up until June 30, 2021.
Source: First National Real Estate and Domain.com