With all the noise around the recent Federal Budget it is easy to forget changes announced in the Victorian State Budget, many of which are due to apply from 1 July 2017. As some of these changes are not favourable, clients have less than a month to utilise the current position. We summarise some of the main changes below.
- The exemption from stamp duty for a transfer of property between spouses will be abolished from 1 July 2017. The principal place of residence will continue to be exempt and so will a transfer due to the breakdown of a relationship. So, anyone wishing to make use of the current exemption needs to act quickly.
- The off the plan duty concession is being abolished from 1 July 2017. It will still be available to a purchaser who occupies the property as their principal place of residence.
- A vacant residential property tax of 1% will apply from 1 July 2018 to residential properties in certain councils in inner and middle Melbourne. It will apply to properties that are vacant for more than 6 months in a calendar year. Some exemptions will apply, for example where the owner is temporarily overseas.
- First home buyers will be exempt from duty for homes purchased after 1 July 2017 where the dutiable value of the home is $600,000 or less. Reduced duty will be payable for homes with a dutiable value between $600,000 and $750,000. The first home owner grant will increase from $10,000 to $20,000 for new homes purchased in regional Victoria after 1 July 2017 with a dutiable value of $750,000 or less. So, first home buyers may wish to wait to sign a contract to buy a new home until after 1 July 2017.
- A lower payroll tax rate for employers in regional Victoria with a payroll that comprises at least 85% regional employees. The rate will be reduced from 4.85% to 3.65% from 1 July 2017.
- Other changes include increasing duty on new vehicles, abolishing duty on certain insurance policies (but not general insurance policies) and revaluing properties every year, rather than every two years, for land tax purposes.
As always with budget announcements, often the devil is in the detail.