The Victorian Government has announced the abolition of stamp duty for commercial and industrial properties as part of the 2023-24 State Budget. From 1 July 2024, these properties will transition to a new annual property tax system as they are sold.
The first purchaser of a commercial or industrial property after 1 July 2024 can choose to either pay the property’s final stamp duty liability as an upfront lump sum, or transition to an annual payment immediately by opting to pay fixed instalments over 10 years equal to stamp duty and interest with a government-facilitated transition loan. After 10 years, the owner of the property will begin paying the annual property tax. This will also help ease deposit funds required to purchase a commercial property.
The annual property tax will be set at a flat 1 per cent of the property’s unimproved land value. This reform will not affect current owners of commercial and industrial properties, and they will only be subject to the new system once the property transacts after 1 July 2024.
The reform is expected to result in a cumulative increase in the size of the Victorian economy up to $50 billion in Net Present Value terms and will help businesses expand and create new jobs by freeing up much-needed capital.
This reform does not apply to residential properties.
The government is expected to consult with business and industry in the coming months, and the final form of the transition will be detailed by the end of the year.
The new tax arrangements for commercial and industrial property in Victoria are unique among the states. While South Australia has abolished transfer duty on commercial or industrial property deals, it has not introduced an annual property tax. The ACT has removed stamp duty on transactions below $1.7 million but still imposes land rates. The Northern Territory retains stamp duty but does not have a land or property tax.
Common questions around this news:
How much is stamp duty in Victoria on a commercial property?
We would suggest reaching out to the Victoria State Revenue Office or a tax expert for exact stamp duty rates for commercial properties in Victoria as of now. You can use our stamp duty calculator for a rough estimate of fees applicable.
What are the new stamp duty rules in Victoria?
As mentioned above, from 1 July 2024, the stamp duty for commercial and industrial properties will be abolished, and these properties will transition to a new annual property tax system as they are sold. Owners can choose between an upfront lump sum payment of the final stamp duty liability or transitioning to an annual payment immediately with fixed instalments over 10 years.
Who is exempt from paying stamp duty in Victoria?
Based on the reform, current owners of commercial and industrial properties will not be affected and will only be subject to the new system once the property transacts after 1 July 2024. However, this reform does not apply to residential properties.
How is stamp duty calculated on property in Victoria?
Currently, the stamp duty is calculated as a percentage of the purchase price or market value of the property, whichever is greater. The exact rate varies and depends on the value of the property. However, from 1 July 2024, commercial and industrial properties will
