Off-the-plan Duty Concession
Buying a home before any buildings works have started or have finished is commonly known as ‘buying off-the-plan’. When you buy off-the-plan, you may be eligible for the off-the-plan duty concession.
The Off-the-plan Concession can apply to contracts for:
- Land and building packages.
- Lots in vertical developments (such as residential towers).
- Lots in horizontal developments (such as low-rise apartments and unit complexes).
- Refurbished lots.
These properties may or may not involve a new subdivision.
The date of the contract is important as it affects the scope of the off-the-plan concession.
How does the concession work?
You pay duty on the dutiable value of your property. This is usually the price paid for the property or its market value, whichever is greater. However, when the off-the-plan concession applies, the dutiable value is the contract price minus the construction or refurbishment costs incurred on or after the contract date. This reduces the amount of duty you pay.
Example: An off-the-plan apartment
Paige buys an apartment off-the-plan as her future home for $620,000. She signs the contract before any construction has started. The vendor advises Paige that $465,000 of her contract price will be spent on constructing her apartment.
This means that the dutiable value of Paige’s apartment, after applying the off-the-plan concession, is $155,000 ($620,000 - $465,000).
Am I eligible?
Eligibility depends on a number of factors, with the most important being when you signed your contract.
You must pay at least the market value for your property. If your contract price is less than market value, duty will be assessed on the property's value at the time you entered into the contract.
There are certain requirements you must satisfy to receive the off-the-plan concession.
Purchaser requirement
You must be eligible for the principal place of residence concession or the first home buyer exemption or concession.
All purchasers must be over 18 years old, except where a purchaser is the guardian of a person with a legal disability.
The concession is not available to a company or a trustee of a trust buying a property off-the-plan.
Residence requirement
At least one purchaser must use the property as their home for a continuous period of 12 months, starting within 12 months of possession of the property, which is normally settlement.
If the residence requirement is not met, duty will be reassessed and all concessions or exemptions removed. You must notify us within 30 days of any change in circumstances that may result in you failing to meet the residence requirement.
On request, and after being satisfied there is good reason, we may vary the residence requirement.
Dutiable value requirement
The dutiable value of your property is usually the greater of the price paid for the property or its market value except when the off-the-plan concession applies. In these circumstances, the dutiable value of your property is the contract price minus the construction costs incurred on or after the contract date.
Generally, the dutiable value of your home after applying the concession cannot be more than $550,000, and $750,000 for first home buyers.
However, the Victorian Government has temporarily increased these thresholds for all home buyers to $1,000,000, for contracts entered into on or after 1 July 2021 and before 1 July 2023.
Talk to our Loans & Finance Team at Mulchy & Co for more information or to apply.
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