Off The Plan Duty Concession – Devil is in the Detail

Tax Law: 03 November 2025

Author: Marco Saccotelli - Our People

In Victoria, there is a patchwork quilt of overlapping concessions in relation to duty payable on real estate depending on the date that a contract of sale was signed, whether a property is purchased off the plan (OTP) and if so, whether there is or is not common property on the plan of subdivision and whether the purchaser is a first home buyer or, if not, otherwise a purchaser of a principal place of residence.

To say that it can be confusing is an understatement, given that there have been temporary eligibility threshold increases in recent State Budgets (to deal with the economic effects of COVID-19) and more recently an extended threshold removal for any purchaser of property OTP where there is common property included on the plan of subdivision. We have seen clients come to us who have used conveyancers and have mistakenly believed that they were entitled to a duty concession when purchasing OTP.

This article focuses on a hypothetical purchaser of an OTP apartment where it is their principal place of residence, but they are not a first home buyer.  Let’s run through some common scenarios based on when the contract of sale was purchased.

Contract Signed For Luxury Apartment OTP with contract date of 21 June 2021

At this time, to access the OTP duty concession (i.e. broadly, where duty is levied on the purchase price less construction costs, rather than the purchase price), the following thresholds existed:

• For a principal place of residence concession:  the dutiable value after deducting construction costs must not exceed $550,000; and
• For a First Home Buyer:  the dutiable value after deducting construction costs must not exceed $750,000.

The Government announced in November 2020 a temporary duty waiver of 50% on new residential premises where the dutiable value was $1m or less.  This was for contracts signed on or after 25 November and before 1 July 2021.   The measure was designed to spark some economic activity in the property sector, particularly apartments and other developments, given the effects of COVID-19.

John rushes to purchase a luxury $2.4m apartment OTP in Port Melbourne and signs a contract on 21 June 2021 so as not to beat the deadline of 30 June 2021 for the waiver to apply.  However, the $1m dutiable value waiver threshold did not apply unless John could first unlock the ability to apply the OTP concession.  The apartment was to be his PPR but after deducting the construction costs of $1.63m, John is left with a dutiable value of $762,000.  He mistakenly believes that as this figure is below $1m and he signed his contract before the cut-off of date of 30 June 2021, he will not only get the OTP concession but also a 50% reduction of the duty payable upon $762,000.

In fact, John is liable for full ad valorem duty on his purchase at the old 5.5% rate, because the reduced value of $762,000 still exceeded the eligibility threshold of $550,000 for the Principal Place of Residence concession.  Instead of duty of $20,995 being payable the duty is assessed at $132,000. 

If John had signed on 1 July 2021 Instead?

Then the Government introduced a temporary increase of the eligibility threshold to apply the OTP concession, for all types of home buyers, to $1m.  In other words, the PPR and First Home Owners’ eligibility thresholds to apply the OTP concession of $550,000 and $750,000 respectively, were to be ignored for the period 1 July 2021 to 30 June 2023. A new $1m limit applied.

If John (and his conveyancer and even SRO call operators) had not been acting under a misunderstanding as to the November 2020 Government announcement and its effect – and he had waited until 1 July 2021 to sign his contract, he would have paid duty on a $762,000 dutiable value and not a $2.4m dutiable value.  His duty would have been $41,910 and not $132,000!

Contracts Signed between 21 October 2024 to 20 October 2026

Then the Government announced that any purchaser can apply the OTP concession for the period above, provided that the property development involves a plan of subdivision which includes common property (e.g. shared driveway, shared reception areas and stairwells).  So a house and land package off the plan is not eligible for this new duty concession because this will simply be a Torrens title land without any common property and an owners’ corporation in existence.  

So a company, individual or trust can now acquire an apartment for example and even though after deducting the construction costs (usually a fixed percentage based on the Commissioner’s determination of the type of building/development), the dutiable value exceeds $1m, the OTP concession can still be applied.   There is no eligibility limit to apply the OTP concession at all.   This change applied from 21 October 2024 to 20 October 2025 and was recently extended for another 12 months through to 20 October 2026.

Let’s take John’s example except this time he purchases a penthouse for $5.2m in South Melbourne and the contract is signed on 20 October 2025.  After deducting the construction costs under his OTP contract of $3.1m, he arrives at a dutiable value of $2.1m.  John will pay duty upon $2.1m ($126,000) and not upon $5.2m ($312,000).  This is even the case if John will not live in the penthouse but will derive investment income by renting the penthouse to executives of international companies (land tax will be payable however). 

It always pays in our view to seek advice from a property lawyer when thinking of acquiring real estate.  Even though there are many competent conveyancers, with duty and taxes in general, the devil is always in the detail.  Duty can be a very significant impost and if not calculated correctly can cause a major headache.