🔑 Key Takeaways
Stamp duty, officially known as transfer duty, is a tax levied by state and territory governments on the transfer of property. It is one of the largest upfront costs of buying a home or investment property and applies to every property transaction, whether you are a first home buyer purchasing a modest unit or an experienced investor acquiring your fifth investment property.
The amount of stamp duty you pay depends on three main factors: the purchase price (or market value if higher) of the property, the state or territory in which the property is located, and whether you qualify for any exemptions or concessions. Each state sets its own rates and thresholds, which is why stamp duty on the same-value property can vary by tens of thousands of dollars depending on where you buy.
Stamp duty is a significant barrier to property ownership and mobility. On a $700,000 property in Victoria, the standard stamp duty is approximately $37,070, a substantial sum that must be paid in addition to your deposit, legal fees, and other purchase costs. Understanding how stamp duty works, what concessions are available, and how to factor it into your budget is essential for any property purchase.
Victoria uses a tiered stamp duty system where higher portions of the property value are taxed at progressively higher rates. As of 2026, the general rates for property purchases in Victoria are structured across several brackets, with the effective rate increasing as the purchase price rises.
📊 Approximate Stamp Duty in Victoria (General Rate)
| Property Value | Approx. Stamp Duty | Effective Rate |
|---|---|---|
| $400,000 | $17,570 | 4.4% |
| $500,000 | $23,870 | 4.8% |
| $600,000 | $31,070 | 5.2% |
| $700,000 | $37,070 | 5.3% |
| $800,000 | $43,070 | 5.4% |
| $1,000,000 | $55,000 | 5.5% |
Note: These are approximate figures for general guidance. Exact calculations should be confirmed with the State Revenue Office or your conveyancer. Rates and thresholds are subject to change. Always verify current rates before making financial decisions.
Victoria offers significant stamp duty relief for eligible first home buyers. These concessions can save tens of thousands of dollars and are one of the most valuable benefits available to people entering the property market for the first time.
Full exemption: First home buyers purchasing a property valued at $600,000 or less pay no stamp duty at all. On a $600,000 property, this saves $31,070, money that can instead go toward your deposit, reducing the amount you need to borrow and potentially avoiding lenders mortgage insurance.
Concession (sliding scale): For properties valued between $600,001 and $750,000, a sliding scale concession applies. The concession reduces progressively as the property value approaches $750,000, at which point the full standard rate applies. For example, a first home buyer purchasing at $650,000 would pay significantly less stamp duty than a non-first-home-buyer at the same price.
To qualify, you must be an Australian citizen or permanent resident, have never owned property in Australia before (including investment property, inherited property, or property owned jointly with someone else), be purchasing the property to live in as your principal place of residence, and move in within 12 months and live there for at least 12 continuous months.
💡 Pro Tip
The first home buyer stamp duty exemption combines with the First Home Owner Grant (FHOG). In Victoria, the FHOG provides $10,000 for first home buyers purchasing or building a new home valued at $750,000 or less. On a new home at $600,000 or under, you could save $31,070 in stamp duty AND receive $10,000 in grant money: over $41,000 in combined savings. Speak with your broker to ensure you claim every benefit you are entitled to.
Victoria offers a stamp duty concession for off-the-plan purchases that can result in meaningful savings. When you buy an apartment or townhouse off the plan (before construction is complete), the stamp duty is calculated on the contract price minus the construction costs that have not yet been incurred at the time of the contract. This effectively means you pay stamp duty on a lower value, as the building component that has not yet been built is excluded from the calculation.
The savings can be substantial, particularly for apartments in early stages of construction. For example, if you purchase an off-the-plan apartment for $550,000 and the dutiable value after the concession is calculated at $400,000, you pay stamp duty on $400,000 rather than $550,000, saving approximately $6,300. Combined with first home buyer concessions, the total stamp duty saving on an off-the-plan purchase can exceed $30,000.
If you are purchasing an investment property or upgrading from your current home, the full standard stamp duty rates apply with no concessions or exemptions available in most cases. This makes stamp duty a significant transaction cost that affects the overall return on investment property and the affordability of upgrading to a larger home.
For investors, stamp duty is added to the cost base of the property for capital gains tax purposes. This means that when you eventually sell the investment property, the stamp duty you paid on purchase reduces your taxable capital gain. On a $700,000 investment property where you paid $37,070 in stamp duty, that full amount is added to your cost base, potentially saving you over $6,800 in CGT at a 37% marginal tax rate (after the 50% discount for properties held over 12 months).
For upgraders, stamp duty adds to the total cost of moving and must be factored into your budget alongside selling agent fees, legal costs, and moving expenses. A family selling a $600,000 home (paying approximately $12,000 in agent fees) and purchasing a $900,000 home (paying approximately $49,000 in stamp duty plus legal fees) faces total transaction costs of over $65,000. This is why many homeowners choose to renovate rather than move, and why getting the right finance structure in place before upgrading is essential.
Foreign purchasers of residential property in Victoria pay an additional 8% surcharge on top of the standard stamp duty. On a $700,000 property, this means an additional $56,000 in duty, bringing the total stamp duty to approximately $93,070. This surcharge applies to foreign individuals, foreign corporations, and trustees of foreign trusts as defined under the Victorian legislation.
Australian citizens and permanent residents are not affected by the surcharge. Temporary visa holders may be subject to it depending on their visa type and circumstances. If you hold a temporary visa and are considering purchasing property, check your eligibility with the State Revenue Office or your conveyancer before committing to a purchase, as the additional cost is substantial and applies at settlement.
If you are purchasing property outside Victoria, be aware that stamp duty rates and concessions vary significantly between jurisdictions. New South Wales has similar rates to Victoria but different first home buyer thresholds. Queensland offers a principal place of residence concession that reduces duty for owner-occupiers at all price points. The ACT has been progressively abolishing stamp duty and replacing it with higher annual land tax. The Northern Territory offers generous stamp duty concessions for homebuyers.
Each state also has different rules around exemptions for property transfers between related parties, farming property concessions, pensioner concessions, and charitable exemptions. Your conveyancer or broker can confirm the exact duty payable for your specific purchase in any state or territory.
📋 Client Example: First Home Buyer Savings
A young couple purchasing their first home (a new townhouse in Armstrong Creek, near Geelong, for $580,000) qualified for both the first home buyer stamp duty exemption (saving $28,670) and the $10,000 First Home Owner Grant for new properties. Combined with a 5% deposit through the First Home Guarantee scheme (no LMI required), their total upfront cost was reduced from approximately $65,000 to just $29,000. These savings made the difference between being able to buy and continuing to rent. We helped them navigate all the applications simultaneously to ensure they captured every benefit available.
Stamp duty must be paid from your own funds. It cannot typically be added to your home loan (with limited exceptions for some lenders who will allow it for loans with LVR below 80%). This means you need to save for both your deposit and your stamp duty, plus other purchase costs like legal fees, building inspections, and lender fees.
A practical budgeting approach is to estimate stamp duty at approximately 5.5% of the purchase price as a general rule of thumb for properties in Victoria (non-first-home-buyers). Add another 1% to 1.5% for legal fees, inspections, and other costs. So if you are buying a $600,000 property with a 10% deposit, you need approximately $60,000 (deposit) plus $33,000 (stamp duty) plus $8,000 (other costs) = $101,000 in available funds.
There is ongoing debate in Australia about replacing stamp duty with a broad-based annual land tax. Proponents argue that stamp duty discourages property transactions and housing mobility, penalises people who need to move for work or family reasons, creates revenue volatility for state governments, and concentrates the tax burden on the moment of purchase rather than spreading it over the life of ownership.
The ACT is the only jurisdiction actively transitioning from stamp duty to land tax, phasing the change in over approximately 20 years. New South Wales trialled a choice model where first home buyers could opt for either stamp duty or an annual property tax, though the program has seen various changes. Victoria has not indicated plans to abolish stamp duty, though the introduction of a windfall gains tax on rezoned land signals ongoing evolution in property taxation.
For buyers today, the practical reality is that stamp duty remains a significant upfront cost in most states. Planning for it, understanding what concessions you qualify for, and factoring it accurately into your purchase budget are essential steps that your finance broker can help you navigate.
While stamp duty cannot be avoided entirely (unless you qualify for a first home buyer exemption), there are legitimate strategies that can reduce the amount you pay or minimise its impact on your overall financial position.
Buy under the concession threshold: If you are a first home buyer in Victoria, keeping your purchase price at or below $600,000 saves you the full stamp duty amount. The difference between buying at $600,000 (no stamp duty) and $610,000 (partial stamp duty applies) can be significant. In some cases, it makes financial sense to buy a slightly cheaper property and avoid stamp duty entirely, using the savings toward renovations or reducing your loan size.
Consider off-the-plan purchases: The off-the-plan concession reduces the dutiable value by excluding unbuilt construction costs. This can save several thousand dollars compared to buying an equivalent completed property, and you still benefit from buying a brand new home with full depreciation benefits and builder warranties.
Negotiate the purchase price: Stamp duty is calculated on the purchase price (or market value if the property is transferred at below market value). Every dollar you negotiate off the purchase price also reduces your stamp duty liability. On a property where you negotiate $20,000 off the asking price, the stamp duty saving is approximately $1,100 to $1,300 depending on the price bracket, a bonus on top of the direct saving.
Separate chattels from the purchase price: Items that are not permanently fixed to the property (such as blinds, curtains, removable shelving, and free-standing appliances) can be separately valued and excluded from the stamp duty calculation. If a property includes $10,000 worth of chattels that are separately identified in the contract, the dutiable value is reduced by that amount. Your conveyancer can advise on what legitimately qualifies as a chattel versus a fixture.
Time your purchase around policy changes: State governments occasionally announce stamp duty changes in budgets or policy announcements. If a reduction or new concession has been announced but not yet commenced, it may be worth timing your purchase to take advantage of the new provisions. Your broker and conveyancer can advise on any upcoming changes that might affect your purchase timing.
In Victoria, stamp duty is typically due within 30 days of the settlement date. Your conveyancer or solicitor handles the payment as part of the settlement process. If you are buying off the plan, different timing rules may apply: duty may be payable when the contract is signed rather than at settlement. Penalties apply for late payment, so ensure the funds are available well before the due date.
In most cases, stamp duty must be paid from your own savings and cannot be capitalised into the loan. However, some lenders will allow stamp duty to be included in the loan amount if the total LVR remains within acceptable limits, typically below 80%. This option reduces the cash you need upfront but increases your total loan amount and the interest you pay over the life of the loan. Discuss this option with your broker to see if it is available and whether it makes sense for your situation.
Generally, no. Property transferred as part of a deceased estate through a will or intestacy is exempt from stamp duty in Victoria. However, if the property is subsequently transferred to a beneficiary who was not named in the will, or if the transfer involves a change in the nature of the ownership (for example, from the estate to a trust), duty may apply. Always confirm with your solicitor when dealing with estate property transfers.
Stamp duty on the purchase of an investment property is not deductible as an annual expense. However, it is added to the cost base of the property for capital gains tax purposes, which reduces your taxable gain when you eventually sell. For commercial property, stamp duty may be claimed as a business expense in certain circumstances. Stamp duty on your personal home is not deductible at all. Your accountant can advise on the tax treatment specific to your purchase.
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Director & Senior Finance Broker
With years of experience in mortgage broking and finance, Melanie helps clients across Geelong, the Surf Coast, Melbourne and regional Victoria navigate the complexities of home loans and business finance. Contact our team on 03 9020 2699.
