Last week, the Victorian government announced a $293 million investment to fund a stamp duty discount of up to 50% on homes which are valued under $1 million. It will apply to residential property contracts that are entered into from 25 November 2020 until 30 June 2021.
The fund was revealed as part of the Victorian Budget 2020/2021, which invests $1.5 billion in new tax relief for Victorian families and businesses. Existing homes will be eligible for a 25% waiver while off-the-plan or newly built homes will receive 50%. For example, on a $1 million home, the stamp duty discount would offer a $27,500 saving for buyers of a new property or a saving of $13,700 on an established house. For many people, this could be the boost they need to get onto the property ladder.
Treasurer Tim Pallas said, “With a waiver on stamp duty, we’ll help more Victorians find their home and get more Victorians back to work.”
A change of heart for ANZ
This news comes on the back of ANZ’s recent announcement that it’s reversing the house price forecast it made in August. The bank previously predicted a 15% peak-to-trough decline heading into 2021 as Melbourne battled its second wave of COVID-19. However, in the six months to October, the city experienced just a 4.9% drop, with a 7.8% rise predicted next year.
What does the stamp duty discount mean for first-time buyers?
Under the scheme, a first home buyer purchasing an existing house worth $700,000 would be eligible for the new 25 per cent waiver as well as the first home buyer duty concession, totalling an impressive tax relief of $18,500.
What’s more, the government has unveiled the Victorian Homebuyer Fund, which is set to provide $500 million to help Victorians buy their own homes. In exchange for a proportionate equity interest in the property, the fund will contribute to the purchase price. The aim is to help reduce the size of the deposit required so more people can afford their homes sooner.
The government has also extended the $20,000 First Home Owner Grant up until 30 June 2021 for people building or buying a new home in regional Victoria to apply for contracts of sale. Mr Pallas added: “This extension gives more Victorians the opportunity to live locally and enter the property market for the first time, while also supporting jobs in regional Victoria.”
What about property investors?
In a bid to attract businesses to regional Victoria, a 50% stamp duty discount on the purchase of industrial and commercial properties will be moved forward to January 2021. The hope is that this will encourage more businesses to relocate, open or expand in the region, helping the hardest-hit economies bounce back after COVID-19.
Although areas of the budget were criticised by the opposition, Mr Pallas believes it will go down in history for helping to keep Victoria afloat. He said: "There is no sugar-coating it, this pandemic has hit businesses hard. This support will help them open their doors, get back on their feet and employ more Victorians.”
If you're a home buyer looking to purchase a new property in Victoria, the stamp duty discount could provide you with the help you need to enter the property market in 2021.