What is stamp duty and do you need to pay it?

Stamp duty applies to most types of property

Stamp duty is usually payable whenever you buy property, whether it’s your first home, a holiday house or an investment property. It also applies to land purchases and when buying a business, with the latter including both land and goods, such as books in a bookshop.

Fixtures, which are the items permanently attached to the property, are also factored in. These include a tenant’s fixtures if the property is leased.

Since July 1, 2024, commercial and industrial property buyers in Victoria have not been required to pay stamp duty. Instead, they’re now required to pay an annual tax based on 1% of the site value.

Stamp duty can still be payable even if you don’t actually purchase a property. For example, if you acquire property, or an interest in a property, through a lease or as a result of a trust, duty may still apply.

More: Hidden costs of buying a house

Stamp duty rates and how they’re calculated

Stamp duty is calculated based on the amount you’ve paid for the property or the market value, whichever is greater. This figure is known as the dutiable value.

As detailed by Victoria’s State Revenue Office (SRO), the amount is calculated on a sliding scale, starting at 1.4% for properties valued at $25,000 or less, and rising to as much as 6.5% – depending on the property value and when the agreement or arrangement for the transfer was entered into.

General rates (as of January 2025) for property purchased in Victoria from July 1, 2021, are as follows:
< $25,000 – 1.4% of the dutiable value
> $25,000-$130,000 – $350 plus 2.4% of the dutiable value in excess of $25,000
> $130,000-$960,000 – $2870 plus 6% of the dutiable value in excess of $130,000
> $960,000-$2,000,000 – 5.5% of the dutiable value
> $2 million – $110,000 plus 6.5% of the dutiable value in excess of $2 million

There are many concessions available, and full exemptions are also possible, so in addition to the contract date and dutiable value, the SRO will want to know more information about your property acquisition. These include:

• Is it a residential property?
• Is it a new home, established home or vacant land?
• Is it your principal place of residence?
• Is it your first home?
• Are you a pensioner?
• Are you a foreign citizen?
• Are you purchasing property in regional Victoria for commercial, industrial or extractive industries use?

A stamp duty calculator is provided on the SRO’s website.

Residential property waiver

There is a waiver of up to 50% available on residential property purchases in Victoria under $1 million, however it only applies to contracts entered into between November 25, 2020, and July 1, 2021. It was a temporary tax relief measure introduced during the COVID-19 pandemic. The 50% waiver applies to new properties, reducing to 25% for existing residential properties or vacant residential land. It doesn’t apply if the property is a gift.

Principal place of residence stamp duty concession

You may be entitled to a stamp duty concession when you buy a property valued at up to $550,000 that you intend to live in for at least 12 months. This applies to all home buyers, not just first home owners. You need to start living in the property within 12 months of settlement and do so for a continuous period of at least a year, although this can sometimes be split with other occupants if you purchase the property with them.

For properties valued between $130,000 and $440,000, the duty reduction is 1%, while those valued between $440,000 and $550,000 may be eligible for a $3100 reduction. The general stamp duty rate (starting at 1.4%) applies for property valued at less than $130,000. Eligible pension cardholders may also be exempt from paying stamp duty, or receive a concession, for a property they purchase as their primary home (see below).

More: What is a Section 32 and why should home buyers read it?

First home buyer stamp duty exemption or concession

Victoria has measures in place to reduce the stamp duty burden on first-home buyers, who may be eligible for an exemption or concession. This applies from July 1, 2017, although reductions of up to 50 per cent may also be made for contracts entered into (up to $600,000) before that date.

The tax relief is an additional measure to Victoria’s First Home Owner Grant ($10,000, for a home worth up to $750,000). For those buyers who meet the eligibility criteria, there’s a full exemption of the stamp duty for properties worth up to $600,000, while first-time buyers of a property with a dutiable value of $600,001 to $750,000 may be eligible for a concession.

There’s no distinction between a new home or one that’s already established. The exemption or concession is also available for vacant land on which you plan to build your first home. You must, however, live in the home as your principal place of residence for at least 12 months continuously (see section above), although different rules apply if you’ve purchased land and are building your first home.

The first home buyer stamp duty concession applies on a sliding scale, with the biggest reductions for those properties closer to $600,001. For example, a home valued at $605,000 will attract stamp duty of just $1045 (a $30,325 saving), but one worth $745,000 will have a $38,444 duty (saving $1326).

More: 7 common mistakes first home buyers make

Pensioner stamp duty exemption or concession

Eligible pension cardholders may be able to claim a stamp duty exemption or concession for a property valued up to $750,000, providing it’s used as your principal place of residence. The SRO will consider whether you’ve purchased the property by yourself or with another person, among other factors.

There is a specific stamp duty calculator for pension cardholders on the SRO website. As well as the contract date and dutiable value, you’ll need to provide each person’s share in the property if there is more than one owner. As with the first-home buyer duty relief, a full exemption is generally available for homes valued up to $600,000, and a concession for those valued from $600,001 to $750,000.

More: Downsizing to an apartment – What you need to know

Foreign citizens may have to pay more stamp duty

A foreign buyer who acquires residential property may have to pay additional land transfer duty. There are exemptions, such as for foreign corporations or people who have a spouse or domestic partner who is an Australian citizen, but generally if stamp duty is deemed payable on a property, the extra duty for foreign buyers will apply.

For contracts made after July 1, 2019, the foreign purchaser additional duty is 8%. The definition of a foreign citizen is someone who: is not an Australian citizen; is not a New Zealand citizen with a Special Category Visa (Subclass 444); or does not hold an Australian permanent residence visa.

Other stamp duty exemptions or concessions

There’s a variety of other stamp duty exemptions and concessions that property buyers in Victoria might be able to access. A few others worth special mention (all subject to meeting strict terms and conditions), include:

Off-the-plan concessions – these apply to house and land packages, residential towers, low-rise apartments and unit complexes, and refurbished lots.
Deceased estate exemptions – an exemption on the transfer of land by the executor of a deceased estate to a beneficiary.
Transfer between spouse or partner exemptions – an exemption for transfers between partners and spouses, including those arising out of a relationship breakdown.
Transfer to someone with a disability exemptions – these are available in some circumstances where a home is provided for a person with a disability.
Regional commercial and industrial property concessions – relating to property bought in regional Victoria that’s used (or converted to use) for commercial, industrial or extractive industry purposes.

More: Pros and cons of buying a property off the plan

Taking out home insurance before settlement

In all cases, stamp duty applies from the date of contract for the property purchase or, if there’s no contract, the date it’s transferred. The duty is payable within 30 days of settlement.

Buyers in Victoria only become responsible for the property at settlement, but it’s generally recommended you take out home insurance when the contracts are signed. As noted by Consumer Affairs Victoria, this is safeguard your (and your lender’s) interest in the property.

If you’re buying an apartment, unit or townhouse that’s part of a complex managed by an owner’s corporation, the insurance for the building and common property may already be in place as part of a strata scheme. You might want to check what is covered in this situation to help determine whether building insurance is required.

More: What happens on settlement day for the buyer?

What to do if you’ve overpaid stamp duty

In Victoria, property buyers who were unaware of the available stamp duty exemptions, concessions and reductions at the time of purchase have five years to make a claim with the SRO. The relevant details are available online.