• Email info@buildinoz.com.au

Do you pay stamp duty on a new build?


Do i pay stamp duty on a new build?

Stamp duty is by far one of the biggest and most unexpected costs of purchasing a new existing home.  Thankfully, there is a way to avoid paying stamp duty on your new home and that is to build a new home rather than buy one.  But there’s a little more to it which is why there’s so much confusion surrounding the topic of stamp duty for new builds.

The truth is that few of you will actually consider how much you’re going to have to pay in stamp duty when you are thinking about buying a new home.  It’s usually an unpleasant surprise that can leave you feeling deflated to say the least. Imagine finding a home you love and think you can afford, to only discover later that you have to pay literally tens of thousands of dollars more in stamp duty, on-top of the purchase price.

The good news is that there is a perfectly legitimate way to avoid paying stamp duty on your actual home.  This is where it can get confusing because you actually do need to pay stamp duty on your block of land, but not the actual home.  Let me explain.

Stamp Duty is a ‘property transfer tax’.  It’s calculated as a percentage of the ‘value’ of the property you are buying (transferring) at the time of purchase.  For example, let’s say you are buying a block of land in Victoria today for $200,000.  When the property is transferred into your name, you’ll be charged a Stamp Duty Tax (property transfer tax) of $6,370.  And, then you’ll go on to build your new home.  Upon completion you may have a property valued at $600,000 but you will have created that extra $400,000 in value yourself by you choosing to build on it.   Alternatively, let’s say you chose not to build, and you went and purchased an existing home for $600,000 you’d pay a whopping $31,070 in Stamp Duty because of the higher value of your property at the time it was transferred into your name.  In this case, choosing to build has saved you a massive $24,700.  That’s your kitchen right there.

Do you pay Stamp Duty on a house and land package?

No, not on the full house and land package.  Again, providing that construction has not yet started, you’ll only pay stamp duty on the value of the land at the time of purchase or a the time of you signing the contract.  Buying a house and land package is considered an ‘off the plan’ purchase and you’ll be granted an ‘off the plan’ stamp duty concession.   For example, let’s say that you sign a contract to purchase a house and land package for $620,000.  The vendor (person who owns the house and land package being sold to you) advises you that the block of land is worth $155,000 and the cost of building the home will be $465,000.  In this case, the stamp duty payable will be calculate on the value of the block of land because that’s what at the value was at the time of you signing the contract.

What if construction has already begun and I am buying a property half-way through the building process?  The rule for how much stamp duty you pay is whatever the value is of the property at the time of transfer or the date that you sign the contract.  Let’s say that you find a home for sale that it is the process of being built.  After making sure you’ve seen all the finished and completed plans and ensured that it is a legitimate building project being undertaken by a registered builder, you may agree to buy the home that is being built despite that it is not yet fully complete.  The lender would access what the value of the property is at the time of you signing the contract.  Then, your Stamp Duty amount would be calculated based on the value amount.  Let’s say you found someone who has installed all services and poured the slab for the home.  You meet them and they agree to sell it to you now, despite that they are yet to finish building the home as per the plans and inclusions.  Your lender will have the home valued at the stage it is now which might look like this:

The value of the land @ $155,000 + 20% of the build value @ $93,000 = Value at time of sale being deemed $248,000.  So, if you are in Victoria today you’ll pay $8,770 in Stamp Duty.

Do first home owners pay stamp duty when building a new home?

There are many government grants and incentives available for people who choose to build a new home in Australia today.  It’s designed to encourage us to create more housing to alleviate affordability issues and of course to accommodate our ever-growing population.

First Home Owners may be eligible for Stamp Duty concessions in their state or territory for both existing and built homes.  Each state and territory has their own grants and concessions and you should take the time to learn what you are eligible for so that you can maximise the savings that may be available to you.  You can learn more about how to get the first home-owners grant when building here.  Or, if you would like to chat to a Build In Oz home loan expert to learn exactly what you might be entitled to please click here.

for more information


The latest information on eligibility, current terms and conditions and application forms for the FHOG in each State is available on the following website - https://www.firsthome.gov.au/ and we recommend that you consult your lender or conveyancer for information specific to your own situation.


Useful Links

How to get a construction loan


How to plan to build a new home





This information is of the nature of general comment only, and does not represent professional advice nor should it be substituted for professional advice. Whilst attempts have been made to ensure the accuracy of the information, we don't guarantee it's accuracy.  Any information we provide is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. You should always obtain professional advice before making any decision to purchase property of any kind.  We recommend you seek professional financial advice prior to entering into a contract of any kind.   Build In Oz disclaims all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this course.  Please refer to our privacy and disclosure statement for further information.

Building Home Masterclass Series