Month: <span>February 2021</span>

Land Transfer Duty

Land transfer duty, also known as stamp duty, is one of the biggest upfront costs associated with buying a home or investment property, and one that many potential buyers fail to anticipate. With the potential to add tens of thousands of dollars to your purchase, it is an essential cost to be aware of when you set out on your pursuit to acquire new property. Let’s go through what land transfer duty is and what it means to you as a buyer. WHAT IS LAND TRANSFER DUTY? Land transfer duty is the tax imposed by the government when property transfers from one hand to another. Its purpose is to cover the cost of changing the title of the property and ownership details. No matter how you acquire property, whether it be through an auction or private sale, as a gift or through a company or trust, you must pay land transfer duty. HOW MUCH DO YOU PAY? Stamp duty is based on the dutiable value of your property. This is the price you paid for the property or its market value, whichever is greater. The greater the dutiable value of your home, the more duty you will have to pay. The general rates of land transfer duty are as follows: Dutiable value range Rate $0 - $25,000 1.4% of the dutiable value of the property >$25,000 - $130,000 $350 + 2.4% of the dutiable value in excess of $25,000 >$130,00 - $960,000 $2870 + 6% of the dutiable value in excess of $130,000 >$960,000 5.5% of the dutiable value However, there are also a number of other factors that determine the amount of duty payable. THE PURPOSE OF YOUR PROPERTY How you intend to use your property is a factor in calculating the duty payable. If you’re purchasing a home to be your principle place of residence (PPR), then you may be eligible for a PPR concession. This concession is available for properties valued up to $550,000, provided you live in the property for at least 12 months within 12 months of settlement. If you’re buying property with another person, then only one of you has to fulfil this requirement. If you’re buying an investment property or a holiday home that you don’t intend to use as your PPR, you won’t be eligible for a concession. However, a land transfer duty waiver is available for residential properties with a dutiable value of $1 million or less. You may be entitled to a land transfer duty waiver of: • 50% for new residential properties, • 25% for existing residential properties, or • 25% for vacant residential land. The contract must be entered into between 25 November 2020 and 1 July 2021 to be eligible for this waiver. A duty concession is also available if you buy a property in regional Victoria for commercial, industrial or extractive industry purposes, where the contract is signed on or after 1 July 2019. FOREIGN PURCHASERS If you are a foreign purchaser, you may have to pay an additional duty of 8% in addition to land transfer duty. This won’t apply if the property is exempt from land transfer duty and if the property is eligible for a concession, the additional duty will be calculated on the purchase price before the concession is applied. An exemption from additional duty may be available for: • Foreign purchasers acquiring a PPR with a spouse/partner who is an Australian citizen, permanent resident or New Zealand citizen who holds a special category visa, and live in this property for 12 months. • Foreign corporations or trusts that are Australian based, whose activities contribute to the supply of housing stock in Victoria. EXEMPTIONS AND CONCESSIONS You may be entitled to other exemptions and concessions that can lower the cost of land transfer duty. If you are a first home buyer, you may be eligible for the first home buyer exemption, concession or reduction. For other buyers, there are a number of other exemptions and concessions available, including those for off-the-plan purchases, for young farmers, and for pensioners. If possible, you may even be able to receive more than one concession on your duty. If you’re looking for more information on land transfer duty and the concessions available to you, our experienced lawyers at MJ Legal can provide an expert opinion and assist you throughout the entire buying process.
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Government incentives for first Home buyers

We at MJ Legal have listed a few of these below to help guide you with your purchase. First Home Owner Grant (FHOG) The First Home Owner Grant (FHOG) is a government initiative that offers a one-off payment of $10,000 to eligible first home buyers who are buying or building a new home in Victoria. […]
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