The words ‘stamp duty’ can be a confusing topic for budding first home buyers and owners. You can spend plenty of time going through numerous websites and government information pages and still not have the best idea about what it is exactly that you’re expected to pay for and to whom.
To sum it up, stamp duty (sometimes referred to as land transfer duty) is the tax that you have to pay to the state government when a property is transferred from one owner to the next; payable within thirty days of settlement in Victoria. The amount of stamp duty you would be required to pay is dependent on many factors; some of which include the state you live in, cost and type of the property, whether you plan to occupy it yourself or rent it out and your Australian citizenship status. Whilst the whole idea of stamp duty can be quite stressful, there are tools that are available to you to simplify the process, such as the Victorian State Revenue Office Land Transfer Duty Calculator.
That being said, moving house is already daunting enough. There’s the decluttering, packing, changing your address with a range of businesses, potentially moving your child to a new school and so much more – and that’s not even focusing on the cost of it. When buying new property already requires you to set aside a great deal of money as a deposit, the last thing a potential buyer wants to do is factor in stamp duty costs of approximately fifty-five thousand dollars into that already extensive budget, in order to purchase a million-dollar property in Melbourne.
However, there has been talk of abolishing stamp duty in Victoria, with an aim to aid the economy and make it easier for people to make the most of the housing market. While there is no denying that stamp duty has been a big source of income for the Australian Government (twenty billion dollars in revenue yearly throughout Australia), it also has it’s negative impacts on the economy; most importantly, it discourages movement and therefore drives down productivity in the economy. If people don’t move house, they aren’t using services such as brokers, lenders, conveyancers, solicitors, real estate agents, movers, cleaners – the list goes on.
In another recent announcement, the Victorian Government has announced that they will be making significant changes to the state’s budget that will see an increase in house affordability. Until 30th June 2021, eligible buyers that purchase an existing home under the price of one million dollars will receive a twenty-five percent reduction in their stamp duty payment. Similar to this, any buyers that are building a property under the one million dollar limit will receive a fifty percent discount in aims to make buying property more affordable for Victorians.
On top of these savings, the Victorian government has announced that they have set up a Victorian Homebuyers Fund, which aims to provide extra assistance for those that may not have the twenty percent deposit needed to avoid Lenders Mortgage Insurance (LMI). With the real estate market rising, this could not have come at a better time for Victoria. With this government assistance available until June 2021, there’s no better time to make the move!