This week, the Victorian government announced that stamp duty will be abolished for first home buyers purchasing new or established properties for a price less than $600,000 from 1 July 2017, subject to the legislation passing through Parliament.
Furthermore, the off-the-plan stamp duty concession will no longer be available for investors, only for buyers who intend to live in the property or who are eligible for the first home buyer stamp duty concession.
While the changes are clearly good news for first home buyers, investors and developers will be left out of pocket according Craig Whatman, tax consulting executive director at Pitcher Partners Melbourne.
“The real big change for investors is the removal of the off-the-plan stamp duty concession,” Mr Whatman told Accountants Daily.
“That is going to significantly increase the total stamp duty cost for investors that are buying off-the-plan properties in Victoria and will make those properties in many cases significantly more expensive than the equivalent property in New South Wales or Queensland.”
Given that developers work in response to investor demand, this could be detrimental to Victorian-based developers according to Mr Whatman.
“That's going to flow in to whether investors wish to purchase apartments, whether they wish to purchase them here or whether they're now keen to look elsewhere in other states,” he said.
“It's a concern, particularly for developer clients, as to whether Victoria is going to remain a competitive place to undertake those development projects for investors.”
Mr Whatman said accountants mustn’t waste any time in discussing these changes with their clients as the window of opportunity to still leverage the off-the-plan concession is quickly closing.
“The government has said that the off-the-plan concession removal will come into effect for contracts signed on or after 1 July this year,” Mr Whatman said.
“It's not a long time, but we've got a few months left for investors to still get access to the off-the-plan concession and the saving that that offers.”
Secondly, he emphasised that accountants will also have to be weary of the Vacant Residential Property Tax that's coming into effect from 1 January 2018.
“That's a 1 per cent tax for those properties which are left vacant for more than six months in a calendar year,” he said.
“Any accountants that look after tax affairs, including the land tax affairs of investor clients, particularly those from offshore, will have to be weary of that because it will be a new disclosure obligation that has to be made to the state revenue office.”