How Is Stamp Duty Calculated In Victoria?

You’ve found a place you love after a string of inspections, you’re half-planning furniture layouts on the tram home, and then someone mentions stamp duty. Suddenly the budget feels wobbly.

In Victoria, stamp duty is officially called land transfer duty. It’s calculated using set rate bands based on the value of the property and your situation (home buyer, first home buyer, investor, foreign purchaser). Once you know which bands apply, it’s far easier to plan for settlement.

The two questions that shape the calculation

Are you buying to live in the property, or to rent it out?
If it will be your home and it’s at the lower end of the market, a principal place of residence concession may apply.

Are you eligible for any relief?
First home buyer relief and off the plan concessions can change the duty bill a lot, but only if the eligibility rules are met and the forms are lodged correctly.

If you want a straight answer on buyer responsibility and how surcharges fit in, our guide on who pays stamp duty is a handy companion read.

Step 1: Work out the dutiable value (it isn’t always the contract price)

Duty is assessed on the dutiable value. In most purchases, that’s the greater of:

• the contract price, and

• the property’s market value.

It matters when you buy below market value (family transfers, special deals), where a valuation sits above the price, or where incentives blur the real consideration on an off the plan purchase. In some late settlement situations, default interest can also affect what’s assessed.

Most buyers won’t hit the tricky edges, but this is why we focus on the real ‘duty base’ early, not the number on the brochure.

Step 2: Apply the right rate table

Victoria uses a sliding scale: you pay one rate on the first slice of value, then a higher rate on the next slice, and so on. A plain-English summary of the current Victorian stamp duty rates can help you visualise the steps.

There are two tables most Melbourne buyers care about: the general rates and the principal place of residence (PPR) rates.

General rates (most homes over $550,000, plus investments and holiday homes)

For many Melbourne purchases over $550,000, the general rates apply even if you plan to live there.

That $960,000 point is a big one: once you cross it, the method changes because the 5.5% applies to the full dutiable value.

PPR concession rates (your home, up to $550,000)

If the property will be your home and the dutiable value is $550,000 or less, there’s a PPR concession. In practice, it reduces duty by up to $3,100 compared with the general rates.

To claim it, you generally need to move in within the required time and live there as your home for a continuous period. If your plans change after settlement, get advice early so you can deal with it properly.

Step 3: Factor in relief and surcharges that fit your deal

First home buyers: relief up to $750,000

If you’re a first home buyer and you meet the eligibility rules, Victoria provides:

• no duty on a home with a dutiable value up to $600,000, and

• a tapered concession for a dutiable value from $600,001 to $750,000.

That taper can feel confusing because it’s not a simple percentage discount. The amount depends on the dutiable value, and the State Revenue Office calculator is often the quickest way to estimate it.

If you’re in this bracket, read up on first home buyer exemptions and tell your conveyancer early, so the claim is built into the settlement process.

Foreign purchaser additional duty

If you’re treated as a foreign purchaser for Victorian duty purposes, there can be an extra eight per cent on top of the normal land transfer duty on residential property. Mixed buying groups can be tricky here (for example, buying with a co-owner who has a different residency status), so it’s worth confirming your position before you sign.

Off the plan: why the duty base can be lower than the contract price

Off the plan duty confuses people because the contract price and the dutiable value can move apart.

In many eligible cases, certain construction costs incurred after the contract date can be excluded when working out the dutiable value. There has also been a temporary concession for strata apartments and townhouses where the contract is signed between 21 October 2024 and 20 October 2026, and it can apply to a wide range of buyers (including investors and trusts). It only applies to certain strata lots with common property, so a house-and-land package usually won’t fit.

The takeaway is simple: the duty result can change a lot on off the plan deals, so you want it checked with the contract and the developer information in front of you.

Step 4: Worked Melbourne examples (so you can see the steps)

These examples assume no special concessions unless stated.

Example A: Investment townhouse in Glen Waverley for $900,000

General rates apply:

• Base duty at $130,000: $2,870

• Amount over $130,000: $900,000 − $130,000 = $770,000

• 6% of $770,000 = $46,200

Total duty: $2,870 + $46,200 = $49,070

Example B: Owner-occupier unit in Preston for $500,000

PPR concession rates apply:

• Base duty at $440,000: $18,370

• Amount over $440,000: $500,000 − $440,000 = $60,000

• 6% of $60,000 = $3,600

Total duty: $18,370 + $3,600 = $21,970

For comparison, the same $500,000 under general rates would be $25,070, so the PPR concession saves $3,100 here.

Example C: Apartment in South Yarra for $1,200,000 (investment)

This is in the $960,000 to $2,000,000 band:

$1,200,000 × 5.5% = $66,000

If you’re negotiating near $960,000, get your conveyancer to model both sides of the line so you understand the budget impact.

Example D: Off the plan apartment for $620,000, with $465,000 of construction after contract

If an off the plan concession applies that allows eligible post-contract construction costs to be excluded:

• Contract price: $620,000

• Less eligible construction costs: $465,000

• Possible dutiable value: $155,000

Duty would then be calculated on $155,000 (not $620,000). Eligibility depends on the property type, buyer type and contract date rules, so treat this as a worked concept, not a promise.

Step 5: Timing and payment at settlement

In most Victorian conveyancing matters, duty is paid at settlement through the State Revenue Office system as part of electronic settlement. Your conveyancer, solicitor or lender will usually handle the lodgement and payment, but you still need cleared funds available.

A few points that reduce settlement stress:

• You generally have up to 30 days after settlement before penalty tax and interest may apply, but the duty amount is usually paid at settlement.

• If settlement is delayed and default interest is payable under the contract, that can affect the dutiable value in some cases.

• Title can’t be transferred until duty is dealt with.

Common traps that catch Melbourne buyers out

The $960,000 jump.
A small change in dutiable value around $960,000 can change the duty outcome because the calculation method changes.

Wrong buyer type in a calculator.
If you enter ‘home’ instead of ‘investment’, or forget a surcharge, the estimate can be way off.

Concessions missed because the paperwork wasn’t ready.
PPR and first home buyer claims are usually made through the digital duties process before settlement. If your conveyancer doesn’t know you’re claiming, or you don’t provide what’s needed in time, you can end up paying more than necessary and then chasing a reassessment.

Buying with someone who doesn’t qualify.
Eligibility can change across the whole buying group. One person’s status can affect concessions and surcharges.

Forgetting the other government charges.
Duty is the big one, but it’s not the only cost. Depending on your deal, there can also be registration fees and related charges at settlement. For a simple run-through, see our explainer on transfer duty and registry fees.

A simple budgeting habit before you bid

If you’re buying at auction in Melbourne, there’s rarely time to ‘think about it later’. A neat way to keep the pressure down is to do one quick run-through before auction day:

• Get an estimate of duty based on the dutiable value you’re genuinely willing to pay (not the agent’s guide).

• Confirm whether you’re aiming to claim first home buyer relief or a PPR concession, and whether your buying group qualifies.

• Make sure your lender or broker has allowed for duty in your cash contribution, because it’s normally paid at settlement and can’t be ignored.

It’s also worth remembering that your settlement statement may include other items like council and water adjustments, owners corporation fees (for apartments and townhouses), and bank settlement fees. Those aren’t duty, but they still need to be funded.

Want us to sense-check your duty position before you commit?

Stamp duty often feels fixed until you realise how much turns on the details: who is buying, how the property will be used, whether the dutiable value is being assessed correctly, and whether concessions are being claimed the right way.

If you’re close to signing, call Pearson Chambers Conveyancing for a complimentary Section 32 contract review. We’ll review the contract and Section 32, talk through your purchase plan, and help you avoid duty surprises before you’re locked in.

Email: contact@pearsonchambers.com.au

This article is general information only and isn’t legal advice.