New legislation introduced to Victoria’s parliament on March 20 would abolish stamp duty for commercial and industrial properties within the state.
The Commercial and Industrial Property Tax Reform Bill 2024 would replace the stamp duty payable upfront on transactions with a Commercial and Industry Property Tax.
That tax would equate to 1 per cent of the property’s unimproved land value and is meant to kick in after 10 years.
Abolishing stamp duty for the sector was initially announced in the Victorian 2023-24 Budget in a bid to help developers purchase and develop new and vacant land.
“This bold move to stimulate commercial property investment signals the Victorian Government’s willingness to further the conversation about tax reforms in a way that can benefit business growth in Victoria,” the Victorian Chamber of Commerce and Industry chief executive Paul Guerra said.
Key business and industry groups have been involved in the consultation process for the reform which is expected to add up to $50 billion in cumulative net present value terms to the economy over the next four decades.
“We’ve worked closely with industry to deliver these changes, supporting Victorian businesses to grow and expand faster without the burden of stamp duty,” Victorian treasurer Tim Pallas said.
If the Bill is passed the changes will come into effect on July 1, 2024 with properties sold transitioning into the new system with one final payment of stamp duty and then the property tax coming in after 10 years.
Eligible buyers can also access a transition loan from the Treasury Corporation of Victoria to fund the final stamp duty payment.
Residential, primary production, community services, sport, heritage or cultural properties will not be affected by the reforms.
Existing stamp duty concessions will still apply for the final stamp duty payment and existing land tax exemptions will also apply for the proposed property tax.
Many within the industry had called for the abolishing of stamp duty on properties to allow local and overseas investors to purchase property and increase rental housing supply.
