Property Tax Update
The Victorian Government has recently announced changes to Stamp Duty and the First Home Buyers Grant, which aim to make housing more affordable for first home buyers.
Stamp Duty will be abolished for first home buyers purchasing a property valued below $600,000.00. Further, first home buyers purchasing a home valued between $600,000 and $750,000 will be eligible for a stamp duty discount, which will be applied on a sliding scale. Both of these changes will apply to new and established homes. Currently, while stamp duty discounts are available for homes valued below $600,000, the reduction is only for 50% of stamp duty payable. While the government states that the aim of the changes is to make purchasing a home more affordable, commentators have raised concerns that the changes may in fact have the effect of increasing house prices.
First Home Buyers Grant
The first home buyers grant will also be doubled for purchasers in regional areas from $10,000 to $20,000.
Vacant Residential Property Tax
The government is also introducing a Vacant Residential Property Tax for properties ‘unreasonably’ left vacant in the inner and middle suburbs of Melbourne. The tax will be levied at 1 percent of the capital improved value of the taxable property. The government has not yet indicated what would constitute a property being left vacant ‘unreasonably.’ However, a number of exemptions from the tax will be available, such as if the property is a holiday home, part of a decreased estate, or if the owner is temporarily overseas. The government stated that the tax is aimed to encourage owners to make vacant properties available for purchase of rent, thereby increasing the supply of homes.