Industrial and commercial property are currently Australia’s hottest sectors, with record low vacancy rates across the country. So with the uptake in investors and businesses looking to snatch up industrial and commercial property, stamp duty is a hot topic.
Many people don’t quite realise how considerable the cost of stamp duty can be when you are purchasing a property. This is why it is important to understand all of the potential costs if you are looking at breaking into the industrial or commercial property sectors.
In case you are unaware, stamp duty is a tax payable to the relevant states or territory when you purchase or acquire an industrial or commercial property. It is to be paid almost immediately after the purchase, or at the time of. This tax is paid to the government and is in fact one of the highest sources of government revenue.
Now, there are a lot of factors that will go into calculating how much stamp duty you will need to pay, and these factors are constantly changing depending on the government and the economy. They include the rate set by the relevant state or territory, the value of the property; either the price you paid or the market value whatever is higher, the intended use of the property, if you are a foreign or local purchaser and any exemptions or concessions you may be eligible for.
Stamp duty is always payable on commercial and industrial properties, so if you are looking at these property sectors, don’t assume it is avoidable. However, there are concessions and exemptions to certain areas of stamp duty that will adjust how much you pay.
With the economy being largely impacted by the pandemic, of course there are stamp duty exemptions that can assist purchasers of industrial and commercial properties.
The Victorian government has committed to alleviating some of the additional costs that buyers face when purchasing a property between now and June 30, 2022. This is only relevant to purchasers in Melbourne’s CBD, Carlton, Southbank, Docklands, North Melbourne and West Melbourne. They will benefit from the commitment the government has made to waive certain taxes, which will decrease the amount of taxes and duties that need to be paid to the government.
The stamp duty exemptions also include purchasers within the City of Melbourne paying $0 stamp duty before the 30th of June 2022, on properties that have been on the market for 12 months or longer and are priced below $1 million. With this commitment from the government, buyers could save up to $55,000.
These exemptions and alleviated costs introduce a great opportunity to anyone looking to purchase, who may have been impacted by the economic downfall witnessed throughout the last two years. Though with the incredibly strong projections and current state of the Victorian property market, it is likely that both investors and businesses will be jumping at the chance to take advantage of any sort of alleviation to stamp duty or property taxes.