Off-the-plan stamp duty: how the concession actually works

Stamp duty is usually one of the largest single costs in a property purchase, and off-the-plan buying can reduce it. The mechanism is not obvious, though, and the size of the benefit depends on something most buyers do not think about: how far along construction is when you sign.

This explains the principle. It does not quote rates or thresholds, because those differ by state and change from year to year. Your state revenue office publishes the current figures, and your conveyancer will calculate your actual liability.

Duty is charged on value, not on price

Stamp duty is calculated on the dutiable value of what you are buying. In an ordinary purchase of a finished home, that is essentially the price.

Off the plan, you are not buying a finished home. You are buying land plus a partly built, or not yet started, building. Several states recognise this by assessing duty on the value at the time of the contract rather than on the value of the completed property.

The earlier you sign, the less exists to be taxed

This is the whole idea in one sentence.

If you sign before construction starts, the thing you are buying is mostly land and a plan. If you sign when the building is nearly finished, you are buying something close to a completed apartment. The dutiable value in the first case is much lower than in the second, even where the purchase price is identical.

That is why the concession is worth most to early buyers and tapers away as a project progresses. Two people can pay the same price for the same apartment in the same building and owe meaningfully different duty, purely because of when they signed.

House and land is a different structure again

A house and land package is normally two contracts: one for the land, one for the build. That separation is not an accident, and it is why duty on these packages is generally assessed on the land rather than on the finished house.

It is also why the two settle at different times, and why you pay the builder in stages rather than all at once.

Eligibility is where it gets specific

Whether a concession applies to you is not a general question, and this is where the detail actually lives. It commonly depends on things like whether you will live in the property or rent it out, whether you are a first home buyer, the value of the property, and your residency status.

Those tests differ by state, and some of them have changed more than once in recent years. Two buyers in the same building can be treated differently.

What to do about it

Three practical things.

• Ask early, not at settlement. Duty is assessed on the contract date, so understanding your position before you sign is worth more than understanding it afterward.
• Get the figure from someone accountable for it. Your conveyancer or solicitor calculates this against current rules and your circumstances. An agent, including us, should not be your source for a number you will rely on.
• Check your state revenue office directly. Every state publishes current rates, thresholds and eligibility, and usually a calculator.

The honest summary

Buying off the plan can reduce duty, sometimes substantially, and the benefit is largest when you buy early in a project. But the rules are state-specific, they have moved repeatedly, and eligibility turns on your own circumstances rather than on the property alone.

Treat any duty figure you see in marketing material as an illustration. Get your own calculated before you sign.

If you want to talk through where a particular project sits in its construction program, which is the part that drives this, get in touch.