Buying property in Melbourne: stamp duty and the upfront costs explained

Buying a home in Melbourne involves more than the purchase price. A range of upfront costs sit alongside the deposit, and the largest of these is usually land transfer duty, the tax commonly known as stamp duty. This article explains what those costs are and how they fit together. It is general information only and not financial or legal advice. For current rates, thresholds and eligibility rules, always check the official sources linked below, because these figures are set by government and change over time.

How a Victorian purchase typically works

Most residential sales in Victoria happen either by private treaty, a negotiated sale, or by public auction, which is especially common across metropolitan Melbourne. Buyers usually pay a deposit when they sign the contract of sale. The balance of the purchase price is then paid at settlement, which often falls some weeks later, depending on what the parties agree.

Land transfer duty must generally be paid before the property transfer can be registered, which usually happens at settlement. Planning for the upfront costs in advance is part of understanding the overall picture.

Land transfer (stamp) duty

Land transfer duty is payable when property is acquired in Victoria. It applies not only to straightforward purchases but also to certain gifts, trust arrangements, leases and changes in beneficial ownership. The duty is calculated on a sliding scale based on the dutiable value of the property, so it generally rises as the value rises.

The form work is handled through Duties Online, where a Digital Duties Form is completed as part of the transaction. The current rates, an online duty calculator, and the full list of concessions and exemptions are published by the Victorian State Revenue Office. Because the brackets and percentages are set by the SRO and change, this article does not quote specific amounts. You can see current figures at the State Revenue Office land transfer duty page and model a scenario with the duty calculator.

Concessions and exemptions that may exist

Victoria offers a number of duty concessions and exemptions, each with its own eligibility criteria. These can include a principal-place-of-residence concession for people buying a home they intend to live in, a first-home-buyer concession or exemption, a pensioner concession, an off-the-plan concession for certain dwellings bought before or during construction, and a young-farmer concession. Whether any of these apply depends on the property, the buyer's circumstances and the rules in force at the time. The authoritative list and the conditions attached to each are maintained by the SRO on its concessions, exemptions and waivers page.

Other upfront costs to factor in

Beyond duty, buyers commonly encounter several other costs:

• Conveyancing or legal fees. A conveyancer or solicitor handles the contract review, searches and settlement process. Fees vary by provider and complexity.
• Inspections. Buyers may choose to commission building and pest inspections, and for apartments or units may review an owners corporation (strata) certificate. These are optional but widely used to understand a property's condition before committing.
• Loan-related costs. If you borrow to buy, a lender may charge application or establishment fees, and lenders mortgage insurance can apply where the deposit is below a certain proportion of the property value. Loan structures and fees differ between lenders. General, independent guidance on home loans is available from the Australian Government's MoneySmart service.
• Registration and search fees. Government fees apply to register the transfer and to conduct title and property searches as part of settlement.

Surcharges that may apply to some buyers

Victoria applies extra charges in particular situations. Foreign Purchaser Additional Duty is a one-off surcharge added to land transfer duty when a foreign purchaser acquires residential property. Separately, the Absentee Owner Surcharge is an annual charge added on top of land tax for absentee owners. Who counts as an absentee owner, and the current surcharge percentages and notification obligations, are published by the SRO, including on its foreign purchaser additional duty page and its absentee owner surcharge page.

Ongoing taxes are separate from upfront costs

It helps to distinguish one-off purchase costs from recurring ones. Land tax is an annual tax on the total taxable value of Victorian land a person owns, with a person's principal home generally exempt and a tax-free threshold applying. Vacant Residential Land Tax is a separate annual tax on residential land left vacant, which has been expanded in scope under recent changes. Current thresholds and rules sit with the SRO at its land tax page and its vacant residential land tax page.

Where to confirm current figures

Because rates, thresholds and concessions change, the safest approach is to read the latest figures directly from the source rather than relying on a remembered number. The State Revenue Office is the authoritative source for duty, surcharges and land tax. For broader financial guidance, MoneySmart offers independent information, and the Reserve Bank of Australia publishes the cash rate that influences mortgage costs.

Sources: SRO land transfer (stamp) duty, SRO duty calculator, SRO concessions and exemptions, SRO foreign purchaser additional duty, SRO absentee owner surcharge, SRO land tax, SRO vacant residential land tax, MoneySmart, Reserve Bank of Australia.

This article was compiled by AI from the sources linked above and screened before publishing. See our editorial standards.