The South Australian Government has abolished stamp duty on the purchase of all off-the-plan city residential properties for the next two years in a bid to encourage inner city residential growth. Associate with Piper Alderman Sam Richardson, explains the changes.
South Australian Treasurer Jack Snelling has confirmed the two year stamp duty concessions will apply for the Adelaide City Council area, including North Adelaide.
Traditionally the amount of stamp duty a purchaser pays on “house and land” packages has been calculated on the cost of the land only (provided the land is unimproved). Conversely the stamp duty payable on the purchase of off-the-plan apartments has been calculated on the completed product.
As an example, on a $400,000 off-the-plan apartment a purchaser could expect to pay around $11,500 more in stamp duty than when purchasing a house and land package (where the land component of the house and land package is valued at $150,000).
It is expected this stamp duty concession will stimulate inner city property sales and encourage higher-density city living by levelling out the stamp duty differences between off-the-plan inner city apartments and house and land packages.
With the construction industry being South Australia’s largest private sector industry, adding $8.1 billion to the state’s
economy in 2010-2011, and the state’s second largest employer, employing an estimated 73,000 South Australians, the
announcement to abolish stamp duty on all off-the-plan city residential properties will hopefully provide an important stimulus for the South Australian economy and the constructions industry.
The following changes will apply:
• Between 31 May 2012 and 30 June 2014 - full stamp duty concessions for off-the-plan apartments valued up to $500,000 providing a concession of up to $21,330.
• Between 1 July 2014 and 30 June 2016 - partial stamp duty concessions for off-the-plan apartments valued up to $500,000 providing a concession of up to $15,000 with stamp duty applicable to the notional land value of the apartment and the value of any construction already undertaken – not the market value of the apartment.
The South Australian Government has also announced that the First Home Bonus Grant (FHBG), which was originally planned to be halved from 1 July 2012 and scrapped entirely by 1 July 2013, will be retained in full for a further year.
Taking into account the Federal Government’s First Home Owners Grant an individual looking to buy an apartment off-the-plan before 30 June 2013 would be entitled to the following concessions:
State Government FHBG
$8,000 (properties valued at $400,000 or less)
Federal Government First Home Owners Grant
$7,000
Stamp duty savings
$16,330
Total saving
$31,330
If you have any questions about the operation of this change to the stamp duty regime on residential city apartments, please contact:
Sam Richardson, Associate
t +61 8 8205 3368
srichardson@piperalderman.com.au
