In recent years, a higher demand for residential real estate has caused prices to skyrocket across Victoria, thus making it increasingly difficult for first-time homebuyers to break into the competitive real estate market. In an effort to make buying real estate easier for first-timers, Victoria has recently passed a change to stamp duty requirements that will officially go into effect on July 1, 2017. Specifically, the government has voted to allow first-time home buyers to pay no stamp duty on any residential property valued under $600,000. For properties valued between $600,000 and $750,000, there will still be a stamp duty discount, though it will be calculated on a sliding scale.
What the Changes Mean for First-Time Buyers
These stamp duty changes are welcome news for those looking to buy a home in Melbourne or the surrounding areas, as this could easily save buyers around $15,500 on their first home purchase. Furthermore, unlike other credits and exemptions designed to help first-time buyers (such as the First Homeowner’s Grant), this exemption will apply to both established and new homes.
As a result, those who have wanted to break into the Victorian real estate market will benefit from waiting to do so until July 1, when the stamp duty change will go into effect. This makes now a great time to start shopping around for residential real estate options—especially house and land packages, for those who wish to build their dream home.
What the Changes Mean for Real Estate Investors
Real estate investors, on the other hand, may not see these stamp duty changes as such welcome news. This is because investors will not be entitled to the stamp duty exemption and will still be required to pay the full amount on any new off-the-plan property. This can easily add anywhere from $15,000 to $20,000 to the total cost of the investment, depending on the full sale price.
Because of this, real estate investors in Melbourne who wish to avoid this new stamp duty are encouraged to make their purchases by June 30, 2017 in order to avoid paying the full cost. Another option to avoid the added cost would be to buy it as a first-time buyer and then live in the property for the required 12 months before turning around and re-selling it. Of course, this option will not be available to those who already own real estate, so it’s not a viable alternative for everyone.
For those who invest after June 30, it will become increasingly important to shop around for properties at the right price while taking the stamp duty into account.
Whether you’re a real estate investor or a first-time buyer, the homebuilders at Mimosa Homes are here to help you make the most of these new changes. Our fantastic range of new homes and house and land packages are designed for first homebuyers and investors alike. Reach out to our team today to get started in designing your next home.