Twist to stamp duty for “off the plan” sales

Twist to stamp duty for “off the plan” sales

The changes to Victorian stamp duty laws coming into effect on 1st July will shake up the investment metrics of buying a new apartment “off the plan” vs buying an existing apartment.

For the next 10 weeks (up to 30 June) you can buy an “off the plan” apartment and avoid most of the stamp duty payable on a completed property. After that time, both “off the plan” and existing property sales will attract stamp duty.

There are many advantages to buying a property off the plan but one of the big ones is about to disappear so if you have been hanging back thinking about it, time is up, and you now need to act. Developers are also keen to secure contracts pre June 30 and are some are even sweetening the deals.

Now there is a third option appearing in the market which is “nomination sale”. This is where the buyer of an “off the plan” apartment on-sells their apartment before it is completed or settled. They do this by nominating the 2nd buyer as the purchaser under the original contract. As the property is a lot closer to completion the 2nd buyer doesn’t need to wait as long.  The 2nd buyer takes on the benefits and obligations of the 1st buyer. In many instances, the nomination is subject to approval by the developer. The sale price is negotiated between the 1st and 2nd buyer and depending on the property may be more or less than the original purchase price.

The interesting thing about a nomination sales is there are about 2 years worth of contracts that pre date 30 June 2017 and it will be interesting to see how the State Revenue Office treats the stamp duty obligations of a nominated contract that is dated pre 30 June 2017 but nominated post this date.

Please comment or add detail if you know more

If you are interested in purchasing a brand-new property off the plan that completes within 6 months please contact Wood Property Partners.

  • David Parsons
    Posted at 16:57h, 10 April Reply

    I am interested to know how the SRO will know the contract date – i.e. what is to stop a developer and buyer post dating a contract for a project that starts say May this year, contracts in August and is predated to June? The SRO has no visibility to contract dates and they are not registered anywhere. Perhaps they will simply wear this risk given that it is only a transitional, not permanent issue.

  • Andrew Wood
    Posted at 11:53h, 09 February Reply

    Thanks David – SRO or ATO can audit contracts of sale or nominations and align the date of the contract with the date of the deposit being paid.

    Hope that helps

  • MHk
    Posted at 14:30h, 17 November Reply

    Hi Andrew I am looking to buy a apartment sale by nomination in Vic. The original buyer contract date was Oct 2017. The price was approx 550k with 24 percent going towards the land. I am a investor.. what will be the stamp duty that I pay since the laws have changed regarding stamp duty?

    • Andrew Wood
      Posted at 12:14h, 06 February Reply

      Hi MHk – Did you end up buying this apartment. The answer to that question depends on a number of things. Are you local or foreign citizen? What are all the conditions of the original contract? I see you are an investor but that sounds like a question for your legal or accounting advisor to ensure they fully understand all then detail.

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