Stamp Duty Concessions and What They Mean for South Melbourne

How Stamp Duty Relief Works for First Home Buyers in Victoria

Victorian first home buyers can access a full stamp duty exemption on properties valued up to $600,000, with a sliding scale concession applying between $600,001 and $750,000. The exemption applies to both new and established homes, provided the buyer moves in within 12 months of settlement and lives there for at least 12 continuous months as their principal place of residence.

In South Melbourne, where the suburb sits close to the city centre and established apartment stock dominates the landscape, the relief creates a clear advantage for buyers willing to consider properties within the concession thresholds. A first home buyer purchasing an established apartment for $580,000 would pay no stamp duty. Without the concession, that same buyer would face a duty bill of around $30,000.

The concession phases out gradually. A property valued at $675,000 attracts a partial concession, reducing the duty payable but not eliminating it entirely. Once a property reaches $750,000 or more, standard stamp duty rates apply in full. For buyers targeting property near Clarendon Street or within walking distance of Albert Park Lake, many listings fall within or slightly exceed the concession cap, making eligibility a factor that directly shapes affordability.

Combining Federal Schemes with Victorian Stamp Duty Relief

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with as little as 5% deposit without paying lenders mortgage insurance. Housing Australia provides a guarantee to the participating lender, enabling buyers to reach a combined deposit and guarantee of 20% of the property value. In Victoria, the property price cap is $950,000 for capital cities and regional centres. The scheme can be used alongside Victorian stamp duty concessions.

Consider a buyer who secures a South Melbourne apartment for $620,000 using the 5% Deposit Scheme. With a $31,000 deposit and no LMI to pay, the buyer's upfront costs are substantially lower than they would have been under traditional lending structures. The property sits just above the full stamp duty exemption threshold, so a partial concession applies, reducing the duty payable to around $1,100. Without the concession, duty on that property would be approximately $32,000. The buyer saves over $30,000 in upfront costs by using both the federal scheme and the state concession together.

Applications for the 5% Deposit Scheme are made through a panel of participating lenders. The buyer cannot apply directly to Housing Australia. Fixed rate, variable rate and split loan structures may be available depending on the lender. No income caps apply, and there are no annual place limits.

What Established Property Buyers Should Know About Eligibility

To qualify for Victorian stamp duty relief, the buyer must not have previously owned property in Australia or elsewhere. This applies to all property types, including homes owned before moving to Australia. If one applicant in a couple has owned property previously, only the eligible applicant can apply for the concession, and the property must be purchased in their name alone or with specific ownership structures that preserve eligibility.

The requirement to occupy the property as a principal place of residence within 12 months and reside there for at least 12 continuous months is enforced. Short-term relocations for work or extended travel do not automatically disqualify a buyer, but the property must remain their primary residence during the eligibility period. Buyers who rent out the property or use it as an investment before meeting the residency requirement may be required to pay the full duty amount plus penalties.

In suburbs like South Melbourne, where proximity to the CBD makes properties attractive for both owner-occupiers and investors, the distinction between an owner-occupied purchase and an investment matters from the outset. Buyers applying for stamp duty relief are committing to live in the property. If circumstances change and the buyer needs to sell or lease the property before the 12-month period concludes, they should seek advice on the implications before proceeding.

How Off-the-Plan Purchases Are Treated

Victoria offers an off-the-plan duty concession for strata or community title contracts signed on or before 31 October 2026 for properties not yet titled or substantially completed. Duty is calculated on the land value at the contract date only, rather than on the total contract price. This concession is available to all buyers, not just first home buyers, during the eligible period.

For a first home buyer purchasing off-the-plan in South Melbourne, the off-the-plan concession and the first home buyer stamp duty concession can both apply, provided the contract is signed before the October deadline and the property meets the eligibility criteria. The combined effect can reduce stamp duty to nil or close to nil on many new apartment purchases within the $600,000 to $750,000 range.

Off-the-plan contracts require careful review. The land value used to calculate duty is determined at the contract date, and buyers should confirm the valuation method with their conveyancer before signing. Settlement may occur 12 to 24 months after contract, and buyers need to ensure they can meet the residency requirement within 12 months of settlement, not contract.

Investment Property Purchases and Stamp Duty

Investment property purchases do not qualify for first home buyer stamp duty relief. Standard duty rates apply in full. For an investment property in South Melbourne valued at $650,000, the buyer would pay approximately $34,000 in stamp duty. This is a significant upfront cost and should be factored into the total acquisition budget alongside deposit, legal fees, and building and pest inspections.

Investors should also consider the broader tax treatment of residential investment properties purchased after 12 May 2026. From the 2027-28 income year, losses related to established residential investment properties purchased after that date are deductible only against other income from residential properties, including capital gains. Properties held at 12 May 2026 and new builds purchased after that date are not affected by this change. Investment loans are structured differently to owner-occupied loans, and interest rates may vary depending on the lender and the loan-to-value ratio.

When to Apply and What Documents Are Required

Stamp duty concessions are claimed at settlement through the buyer's conveyancer or solicitor. The application is submitted to the State Revenue Office Victoria as part of the transfer process. Buyers do not need to apply separately before contract, but they should confirm their eligibility with their conveyancer early in the purchase process to avoid surprises at settlement.

Documentation typically includes proof of identity, evidence that the buyer has not previously owned property, and a declaration that the property will be occupied as the principal place of residence. Buyers using the 5% Deposit Scheme or Help to Buy will also need to provide documentation to their participating lender as part of the loan application. The lender and the conveyancer coordinate to ensure all requirements are met before settlement.

Buyers purchasing property in South Melbourne should account for settlement timelines when planning their move. The requirement to occupy the property within 12 months of settlement allows time for minor delays, but buyers should avoid extended settlement periods unless necessary.

Call one of our team or book an appointment at a time that works for you. We'll walk through your eligibility, loan structure, and the full cost of your purchase, including how Victorian stamp duty concessions and federal schemes apply to your specific situation.

Frequently Asked Questions