Andrew Date

By: Andrew Date

First Home Buyers – from 1st July, will you spend or save your $25,000? Back

 

At Industry Insider, we work closely with buyers at all stages of their property journey. If there are changes to legislation or market trends that might affect them, we try to provide advice that’s as helpful and timely as possible, keeping clients informed every step of the way. In this post, we look at recent Victorian property legislation updates, particularly in relation to stamp duty. Here are the key points you need to know.

At Industry Insider, we work closely with buyers at all stages of their property journey. If there are changes to legislation or market trends that might affect them, we try to provide advice that’s as helpful and timely as possible, keeping clients informed every step of the way. In this post, we look at recent Victorian property legislation updates, particularly in relation to stamp duty. Here are the key points you need to know.

If you’re saving for a first home

With a strong investor presence having been established across metropolitan Melbourne in recent years, it’s become increasingly difficult for many young people to get a foot on the property ladder. Stamp duty is just one factor that influences affordability.

If you’re new to the property market and not familiar with the term, Stamp Duty is a tax, also known as Land Transfer duty. You pay it when you purchase a home and it’s calculated on a sliding scale according to the sale price of the property. How much is it? According to the government’s online calculator, if you purchase a home for $600,000, you’ll pay just under $25,000 in stamp duty. This is in addition to paying for your home.

The already significantly tough task of saving for a first home has hypothetically become a bit easier for many would-be homeowners, with the Victorian Government’s 2017 budget introducing changes to stamp duty legislation aimed at giving struggling first home buyers a hand.

What’s new?

Stamp duty will be abolished for first home buyers on homes under $600,000.

Stamp duty will be calculated on a sliding scale for first home buyers on homes between $600,000 and $750,000.

What does this mean for buyers?

It’s potentially a helpful saving for those singles, couples, and families who know that every dollar counts when it comes to saving for a home.

Ready to buy your first home?

The changes to Victorian Stamp Duty on property purchases mean that you can expect to save somewhere between $20,000 and $40,000 on the purchase of your first property. That’s a figure not to be sneezed at! However, many educated property experts have noted that the stamp duty savings may be of little help if the savings first home buyers make on stamp duty, are just added directly onto the end of the initial budget. This could lead to property prices in this price bracket jumping with extra demand expected as of 1st July directly from first home buyers who have been waiting to save on stamp duty.

After the 1st July if the supply of properties in this bracket increases we could see a plateau in prices. However, if the supply remains low and the spike in first home buyers increases, property prices will again increase over the winter period.

Industry Insider suggests that you factor the decreased stamp duty costs into your property purchase planning. But don’t let it send you off course. In a market as competitive as ours, with supply so low, the answer is never as simple as it might seem.

If you’re looking to invest

Currently, up until the 1st July, there has been a large saving for anyone purchasing a property (OFF THE PLAN) Brand new properties have been exempt from stamp duty for many years. However, as of 1st July, Investors will be required to pay the entire stamp duty amount. The reality is in my opinion, the stamp duty savings that were initially there have always been added to the contract price.

I have seen recent emails and videos from project marketers & sales agents stating to investors to get in now and SAVE $40,000- $100,000 in stamp duty. Buyer beware, be careful when something sounds too good to be true, it normally is.

Beyond the changes to Stamp Duty, Melbourne property investors should be aware of the introduction of the Vacant Residential Properties Tax. In essence, this tax penalises owners who unreasonably leave their properties vacant, with a tax levy of 1% of the property value.

The new tax aims to free up some vacant properties to new would-be buyers and renters rather than having them lay dormant as investment properties.

The role of the Buyer’s Advocate

A Buyer’s Agent can help you navigate key pieces of legislation that apply to your property purchase and investment decisions. If you’re looking for more information on any of the above points or if you need expert advice, contact Industry Insider on 1300 181 997 or by emailing me at andrew@industryinsider.com.au