Today the McGowan Government announced an Off-the-plan Duty Rebate (Rebate) scheme.
Under the Rebate scheme buyers who enter into an off-the-plan contract to buy a residential apartment may be eligible for a rebate of 75% of the duty paid, capped at $50,000.
The Rebate applies to:
- transfer duty; and
- foreign buyer duty.
To qualify for the Rebate:
- The contract has to be entered into between 23 October 2019 and 23 October 2021.
- The contract needs to be a pre-construction contract where development has not commenced on the development site at the date of the contract.
- The contract must be for a new residential unit or apartment within a multi-tiered strata scheme, which excludes single tier strata schemes as defined under section 3(1) of the Strata Titles Act 1985 (and by implication, will not apply to units in survey-strata schemes).
- The strata plan must be registered within 3 years of the date of the contract. Buyers can apply to the Commissioner to extend this timeframe under certain circumstances (through no circumstances have been specified by the Department of Finance at this point in time).
- The Buyer needs to be the person named on the contract or an eligible transferee.
Some implications of the rebate:
- For eligible buyers, the Rebate could amount to savings on the transfer duty of up to $50,000.
- Foreign buyers will also benefit with up to $50,000 in savings on both the transfer duty and the foreign buyer duty.
- Developers of multi-storey strata schemes may see an increase in local and foreign off-the-plan buyers keen to take advantage of the Rebate.
- Developers of strata schemes that have already commenced construction will need to be aware that the Rebate is not available to their buyers.
- It may be that some Developers delay commencement of construction to maximise the number of eligible sales that they can achieve.
- Developments in the very early stages of construction (which are ineligible) that are competing for sales with projects for which construction has not commenced (which are eligible) are at a comparative disadvantage.
We expect that further information will be released in due course on the legislative regime that will underpin the Off-the-plan Duty Rebate scheme.
If you have any queries on the Off-the-plan Duty Rebate (Rebate) scheme, please contact us.