30th November 2020: Victorian Budget: Stamp Duty For New Homes To Be Reduced By 50 Per Cent

VICTORIAN BUDGET: STAMP DUTY FOR NEW HOMES TO BE REDUCED BY 50 PER CENT

Brought to you by Domain.com.au - Melissa Heagney

The cost of stamp duty will be slashed by up to 50 per cent in Victoria under a new move announced in the state budget today.

The full 50 per cent discount will only apply to newly built homes valued up to $1 million and will be in place until the end of June, 2021.

Those buying existing homes will receive a 25 per cent discount on stamp duty, up to the same value.

The emergency tax relief will apply to contracts entered into from Wednesday, the budget papers stated, as part of the government's "Big Housing Build".

The move fell short of the announcement made by the NSW government last week that proposed an opt-in, opt-out stamp duty, which could be replaced by a cheaper annual land tax.

Victorian Treasurer Tim Pallas said the discounts would entice people back into the property market, which had taken a major hit during the COVID-19 pandemic.

The state government is also predicting an 11 per cent peak-to-trough fall in house prices, forecasting the lowest point would be in June, 2021. They have forecast that prices will not recover to pre-COVID-19 levels until 2022-23.

"It's about equity and putting the support and effort where it can best have effect," he said. "The aim is to get as many people in that price bracket [$1 million] and below back into the market."

The stamp duty discount was not the only housing-related tax to be reduced: a 50 per cent land tax discount for build-to-rent (BTR) developments was also announced as part of the budget.

Discounts will include an exemption from the Absentee Owner Surcharge and will be introduced from January 1, 2022 and be in place until 2040.

In his speech to Parliament, Mr Pallas estimated this would add an extra 5000 homes for renters.

"Investment in the BTR sector will provide greater choice and diversity of housing options for renters and support Victoria's economic recovery," the budget papers said.

Victoria's long-awaited state budget revealed the impact of the coronavirus pandemic on the state's economy, with the operating deficit growing from $6.5 billion to a projected $23.3 billion due to the coronavirus crisis.

Total revenue is down 4.2 per cent and tax revenue down 11.3 per cent as the state economy recovers from the strict stage four lockdown.

Under the restrictions introduced by the Andrews government to stop the spread of coronavirus, public auctions and in-person house inspections were banned for more than seven weeks in Melbourne.

The budget papers said the pandemic had attributed to a drop of 25.9 per cent in stamp duty revenue to $4.6 billion in the 2020-21 financial year, a massive fall from the previously estimated $7.1 billion in revenue.

"Land transfer [stamp] duty is expected to recover from 2021-2022 and grow by an average of 15.4 per cent a year, over the forward estimates, but is not expected to reach the 2018-2019 level until 2022-23," the budget papers stated.

Many in the industry, including the Property Council of Australia, had high hopes that the Victorian government would introduce a stamp duty scheme similar to the NSW one to boost the property market.