Do you qualify for the new stamp duty reduction for your commercial property purchase?

For contracts dated 1 July 2019 onwards, there is a new land transfer duty (ie stamp duty) reduction available when purchasing properties in regional Victoria that will be used for commercial or industrial purposes.

The State Government introduced this new reduction to encourage the creation of business opportunities outside of the greater Melbourne area, and to minimise costs for businesses wishing to expand their operations in regional Victoria.

This land transfer duty reduction starts with a saving of 10% and increases over the next five years to reach a 50% reduction on 1 July 2023.  When the reduction is in full swing, this will mean a saving of $12,535.00 on a purchase price of $500,000.00.  Here is a table with the specific dates and percentages:-

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So, can you take advantage of this reduction?

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You may be entitled to a duty reduction if you can satisfy these two hurdles:-

Hurdle 1: Location

The property (with or without a building) must be wholly in regional Victoria.  Eligible council areas local to our firm include:-

• Baw Baw Shire Council;
• Latrobe City Council;
• South Gippsland Shire Council;
• Bass Coast Shire Council;
• Wellington Shire Council; and
• East Gippsland Shire Council.

Call or email us for a full list of councils within regional Victoria.

Hurdle 2: Use

• You must intend for the property to be solely or primarily used for a qualifying use which, generally speaking, includes most commercial, industrial or extractive uses.  For example, a commercial use includes retail, office spaces and restaurants, an industrial use includes factories, warehouses and processing facilities, and extractive uses include mines, quarries, wells and bores.  The qualifying use may be an existing use or new/intended use; and

• The property must be used as that qualifying use for a continuous period of twelve (12) months commencing within two (2) years after the you become entitled to possession (usually the settlement date).

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Contact us for an exhaustive list of qualifying uses.

If you can successfully jump the ‘location’ hurdle and the two elements of the ‘use’ hurdle, then chances are you are eligible for this reduction.

As with most stamp duty reductions/concessions/exemptions, this reduction cannot be used in conjunction with any other concession/exemption, cannot be used by a foreign resident, and it requires you to self-report to the SRO (and pay the full duty) if the qualifying use element is not actually satisfied within the specified period.

If you have purchased a property with a contract date of 1 July 2019 or later that satisfies these hurdles but you did not get a reduction, contact us to see if you are eligible for a refund.

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Here is a link to the SRO’s Land Transfer Duty Calculator to help you work out how much you might save on the purchase you have in mind – https://www.e-business.sro.vic.gov.au/calculators/land-transfer-duty

Lastly, if it is nearing the end of the financial year, you may like to consider signing the contract after 30 June to gain an additional 10% reduction (obviously consider this against all other elements including any taxation consequences and the risk of another purchaser signing before you do).

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If you would like to discuss your conveyancing transaction, please call our Drouin or Warragul offices to make an appointment, or book online.  We would be pleased to discuss your specific circumstances with you.

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