Property Purchase and Sale Affected by Recent Changes?
As of 1 July 2017, first home buyers in Victoria will save thousands of dollars when they purchase their first home, thanks to changes to stamp duty fees and government grants.
What will Change in Victoria?
In the lead up to the new financial year, eligible first home buyers purchasing a property valued up to $600,000 were entitled to a 50% discount on their stamp duty payments.
However, as of July 1 the government has slashed the cost of stamp duty for first home buyers even more, with any property purchased up to the value of $600,000 is free of any stamp duty charges.
Any properties purchased for more than $750,000 will also be eligible for a stamp duty subsidy on a sliding scale.
First Home Buyer Grants
If you’re looking at building your first home in Victoria and are spending less than $750,000, there’s a good chance you’ll be able to take advantage of the $10,000 government grant.
However, if you’re looking at building a new home in regional Victoria, this figure will be increased to up to $20,000, as long as the value of the property is still within the $750,000 cap.
What Does This Mean for Victorians?
Stamp duty reductions and generous first home buyer initiatives will take some of the pressure off Victorian buyers, however, experts have warned that it could create stiffer competition for those looking at entering the property market for the first time.
It’s also expected that Victoria’s more affordable suburbs could end up with prices skewed between the $400,000-$700,000 mark, with some property owners even holding off from listing their property for sale until the stamp duty reduction came into play on the first of this month.
It’s anticipated that there will be greater demand, and hopefully, a bit more supply as savvy vendors play the market.
You can find more information on these Victorian incentives, here!
Changes to Foreign Resident Capital Gains Withholding Payments
For any Vendor that enters into a Contract of Sale for the sale of a property from 1 July 2017 that holds a contract price of $750,000 or above, will now need to apply for a Foreign Resident Capital Gains Withholding Clearance Certificate (FRCGW) through the Australian Taxation Office (ATO).
Who Does This Effect?
As the Vendor, your legal practitioner is required to provide a Clearance Certificate to the Purchaser’s Legal Representative prior to settlement.
Should the Clearance Certificate not be provided to the Purchaser’s Legal Representative prior to this timeframe, the Purchaser MUST direct 12.5% of the contract price to the Australian Taxation Office.
Therefore, based on a $1,500,000 sale, if a clearance certificate is not obtained, the sum of $180,000 must go to the ATO. This money will not be made available to you until the next financial year.
You can find more information on these changes, here!
If you’re still unsure about how these changes may affect you, or if you’re ready to start your journey towards becoming a property owner, talk to Argent Law about our conveyancing and property law services.
* Please note that stamp duty concessions and first home buyer grants vary from state-to-state and that further enquiries into entitlements should be made prior to making any purchases.