Do You Pay Stamp Duty on a New Build?

If you have typed "do you pay stamp duty on a new build?" into your phone while standing in a display suite, you are definitely not alone. The short answer is usually yes, but the Victorian rules around new homes come with enough twists to make your head spin or save you tens of thousands of dollars if you play them right. Below, let's unpack how stamp duty (officially "land transfer duty") works for Melburnians eyeing a freshly built property, whether it is a sleek apartment in Brunswick or a house and land package out in Clyde North.

Stamp Duty in Victoria — The Basics

Stamp duty is a state tax charged when legal ownership of land changes hands. In Victoria, the State Revenue Office calculates the tax on the property's "dutiable value". The rates climb the moment your price tag passes each threshold, topping out at 6.5% for values above $960,000. For a finished $750,000 townhouse, that is roughly $40,070 landing on top of your deposit, payable at settlement or in rare cases within 30 days of settlement.

No one likes writing that cheque, which is why understanding the concessions for new builds is crucial.

Why New Builds Get Special Treatment

"New build" covers more scenarios than you might think:

• Off the plan apartments and townhouses – you sign up before the builder even installs the kitchen
• House-and-land packages – one contract for land, another for construction
• Spec homes – the builder finishes everything, then sells a turnkey product
• Vacant land for a custom build – you buy the block, then commission your dream design

Each pathway connects with stamp duty differently because the law focuses on what physically exists at contract date. If much of the building work is yet to be done, the value of that future work can be sliced out, trimming the duty bill.

The Major Concessions and Exemptions

Off the Plan Concession

Sign before the slab is poured and you can deduct the value of construction not yet completed. Picture an $850,000 Collingwood apartment where $300,000 worth of work remains after you sign: the SRO assesses duty on $550,000, knocking more than $14,000 off the tax. A new tweak announced in June 2025 extends this concession to October 2026 and scraps the $1 million price cap for eligible apartments and townhouses. Handy, right?

First-Home Buyer Exemption or Concession

If the reduced dutiable value is $600,000 or less, first timers pay no duty. From $600,001 to $750,000 a sliding scale applies. Combine that with the off the plan concession and many buyers squeeze under the limit comfortably.

Principal Place of Residence (PPR) Concession

Not a first-timer? Owner occupiers can still claim a duty discount when the dutiable value is $550,000 or under.

Pensioner Concession

Holders of an eligible pension card receive a once only exemption or concession on homes valued up to $750,000.

City of Melbourne New-Home Concession

Buy a brand new residence inside the City of Melbourne municipal boundary for $1 million or less and you may score a 50% duty cut or even a full exemption. It is designed to lure owner occupiers back into the CBD and fringes.

House and Land Packages: The Split Contract Trick

With genuine house and land packages, you sign one contract for the land and a separate agreement to build. Stamp duty lands only on the land price. Say your land is $300,000 and the building contract is $350,000 you pay duty on $300,000, saving more than $25,000 compared with buying a completed $650,000 home.

Caution: some "turnkey" deals wrap land and build into a single contract. If that contract is not structured properly, the SRO can slug duty on the total price. Always have a conveyancer review the paperwork before you sign.

Real-World Examples

Numbers based on July 2025 duty calculator rates.

Timing Matters

Duty is triggered by settlement, not by the day you move in. For a land only contract, you might be paying duty months before the first tradie lays a brick. Miss the 30 day deadline and penalty interest starts ticking.

Five Ways to Keep Duty Down

1. Buy early in the build – the more work left, the bigger the off the plan deduction
2. Stack concessions – off the plan plus first home or PPR can slash the bill to zero
3. Separate contracts – true house and land packages split duty from construction
4. Crunch numbers first – use the SRO calculator with your conveyancer before signing
5. File paperwork promptly – a good conveyancer secures concessions and lodges forms on time

The Conveyancer's Role (and Why You Want One)

A conveyancer does more than shuffle papers:

• Confirms how each concession applies to your deal
• Prepares and lodges the Digital Duties Form
• Calculates exact duty to ensure funds are ready at settlement
• Chases refunds if the SRO reassesses duty down the track

Think of them as your guide through a maze where one wrong turn costs thousands.

The Sting for Foreign Buyers

Foreign purchasers face an extra 8% duty on top of the usual rates. Even if an apartment's off the plan value drops to $550,000, a non-resident still cops roughly $44,000 in additional duty. 

Common Traps That Trip Up Buyers

• Construction delays – some concessions evaporate if the build drags past set deadlines. Stay on top of builder progress
• Changing occupancy plans – claim a PPR concession then decide to rent the place? The SRO can claw back duty plus interest
• Post-contract upgrades – fancy extras added after signing can bump up the dutiable value
• Nominations – transferring the contract to a family member later often sparks a fresh duty bill unless structured carefully

What's Next for Stamp Duty?

Rumours of swapping upfront duty for an annual property tax have been swirling around Spring Street. While there is no legislation yet, a review is under way. Changes could shift costs from the settlement table to yearly bills, altering your long term budget. A clued in conveyancer will keep you in the loop and alert you to opportunities as the political winds change.

Wrapping It Up

Stamp duty on new builds can feel like a hidden trapdoor under that shiny timber flooring. With the right advice, it becomes a hurdle you can step over rather than fall into.

Ready to crunch the numbers on your off the plan contract or house and land package? Call Pearson Chambers Conveyancing on 03 9969 2405 or email contact@pearsonchambers.com.au for a free Section 32 review and personalised stamp duty roadmap. Your future self the one settling into that brand new living room will thank you.