Off the Plan Stamp Duty ConcessionsApr 13, 2017
From 1 July 2017 the “rules of the game” in respect of off the plan sales duty concessions will dramatically change.
As a result stamp duty concessions for off the plan sales will only be available in very limited circumstances.
At present legislation has not yet been drafted to amend the Duties Act in this regard.
All that is available is a “Fact Sheet” published by the State Revenue Office.
Rather than “reinvent the wheel” this link provides a copy of that Fact Sheet giving the details that are now available regarding the proposed changes.
What does it mean?
In simple terms:
- the off the plan duty concessions will not be available for any non-residential developments when the relevant contract of sale is made on or after 1 July 2017;
- the off the plan duty concessions will only be available in respect of contracts of sale made on or after 1 July 2017:
- to first home buyers who buy a residential property at a price of not more than $750,000; or
- to buyers who buy for a price of not more than $550,000 and are entitled to a principal place of residence stamp duty concession.
The off the plan duty concession is uniquely available in respect of off the plan sales in Victoria. Its “removal” for most development sales will means that most buyers off the plan in Victoria will not be entitled to any off the plan duty concessions, which is a concession not available in other states of Australia.
More information will be provided when draft legislation is prepared and published or when the Victorian Government or State Revenue Office publish more information.
The Vacant Residential Property Tax
A New Tax
The Victorian government has announced that from 1 January 2018 vacant residential property will be subject to an annual tax in an amount equal to 1% of the Capital Improved Value (CIV) of the relevant property.
The New Tax Details
Much of the details relating to this new tax, has not yet been decided on by the Victorian Government.
A Fact Sheet published by the State Revenue Office is available via this link giving details of which is known at present regarding this new tax.
Other Vacant Residential Taxes
To my knowledge a vacant residential tax is relatively rare.
Vancouver Canada has a tax of that type as do the major Israeli cities of Tel Aviv, Jerusalem and Haifa. Accordingly there are not many examples of this type of tax that can be reviewed to see what the relevant rules may be.
Exemptions from the new tax will be of critical importance.
The Vancouver and Israeli vacant residential taxes have relatively few exemptions available and if those examples are followed in Victoria substantial hardship may be caused to a number of people who now own vacant residential land and whose residential land becomes vacant for more than 6 months.
As a result of the hardship caused by the imposition of that new tax some owners of vacant residential land may be forced to sell their properties.
This may be in fact what the government intends. Namely that the relevant residential properties be “put back in circulation” that is, become available to be used as a residence by a new owner or as a residence by a tenant of a new owner.
These are as yet many unanswered questions regarding the new tax and some of them are as follows:
- What will be regarded as a residence for the purposes of this new tax?
- Will the imposition of the tax be able to be avoided by removing some facilities from a building that would otherwise be regarded as a residence such as cooking facilities?
- Will an exemption be available for a property that qualifies as a residence and which an owner wants to let but cannot find an appropriate tenant unless the asking rent is reduced?
- Will an exemption be available where a property is not in tenantable condition? For example has a severely leaking roof or its water or drainage or electrical facilities do not work properly or are in dangerous condition or the property suffers from significant mould or rising damp or some other infestation or contamination?
- Will exemptions apply if the property is to be redeveloped and the owner’s expectations regarding the time required to obtain say a planning permit for development which was originally thought to be 2-3 months subsequently turns out to be more than 6 months?
When more substantive information becomes available regarding this new tax we will prepare a further publication regarding it. In the meantime, if you have any queries regarding stamp duty concessions or the proposed vacant residential property tax please contact the Property Law Group on (03) 8600 8888.