Purchased under Construction Apartment Advised No Stamp Duty Payable - Now Have Got Stamp Duty Bill of $9k+

Dear OzBargain community,

I entered into an agreement with a developer in Melbourne to buy an apartment in an under-construction building in July 2020.

Being a first home buyer, I was looking for something where I don’t have to pay any stamp duty as this is only one in a lifetime opportunity!

The contract value was more than 600k, the threshold for no stamp duty and hence I was worried. However, the sale lady (sales director) said that since the apartment is under construction, it’s considered off the plan and the dutiable value will be less than 600k and hence I wouldn’t need to pay any stamp duty. This she confirmed me on What’sApp with a screenshot of the message from her boss (director) confirming the same!

Now, two weeks before settlement, my solicitor confirmed that I will need to pay +9k for stamp duty as the dutiable value of the apartment has been evaluated around 640k by the developer based on the % of completion on the day of signing the contract. I am flabbergasted!

When I brought up this to the developer/sales team (also shared the screenshot of the WhatsApp chat), but they don’t give a buzz. They (director) shamelessly said that the dutiable value calculation is done by an independent body which we don’t have control and hence you need to pay the stamp duty. I was double flabbergasted by his shamelessness! He didn’t even say sorry for his mistake and rather had the audacity to say that 9k is too little of a stamp duty for this property.

Please suggest me what are my options? Can I report this shady practice of the developer anywhere ?

This not the end, they are also forcing me to settle on the due date (first week of Jan) despite the fact that all the variations mentioned in the contract is yet to happen! This is another battle for me..

Thanks in advance for your suggestions..
Wishing you all a very Happy New Year 2021!


  • +2

    You probably saved 9k in legal fees from not preparing well ahead of time, so it's a wash isn't it?

  • +2

    You sound like you need to see a solicitor, and find out what your legal requirements are, and fast

    • +14

      I thought the obvious thing to do was make a post on ozbargain and ignore everyone's advice.

  • It's one of those things that you check with a solicitor before signing a contract. Not sure if you can hold them responsible as it is not the seller who is imposing the stamp duty. Seek advice from your solicitor?

  • +1

    Wow stamp duty is cheap over there, my first owners home at $625k got me a $25k stamp duty. Do you have a settlement agent?

    • Vic is a concessional rate between 600-750k. In WA, that stops at 530k so you would have paid the full rate on a 625k property.

  • +1

    Off the Plan Duty Concession

    You pay duty on the dutiable value of your property. This is usually the price paid for the property or its market value, whichever is greater. However, when the off-the-plan concession applies, the dutiable value is the contract price minus the construction or refurbishment costs incurred on or after the contract date. This reduces the amount of duty you pay.

    Example 1 - An off-the-plan apartment
    Paige buys an apartment off-the-plan as her future home for $620,000. She signs the contract before any construction has started. The vendor advises Paige that $465,000 of her contract price will be spent on constructing her apartment.

    This means that the dutiable value of Paige’s apartment, after applying the off-the-plan concession, is $155,000 ($620,000 - $465,000).

    and calculating:

    Calculating the off-the-plan concession
    There are two methods of calculating the off-the plan concession - the fixed percentage method and the alternative method - and your vendor must choose one. Both methods require information that only the vendor will know.

    About six months before the settlement of your property, your vendor will advise your conveyancer or solicitor of the dutiable value of your property after applying the off-the-plan concession. If you want to estimate the duty you will pay on your property, you can then contact your conveyancer or solicitor.

    In order to calculate the concession, the transferor or vendor must:

    Determine the percentage of construction completed as at the date of the contract of sale.
    Select a method of calculating the concession and identify the relevant figures.
    Provide all these details to us when they complete the Digital Duties Form.

    As above the vendor should have advised your solicitor at signing what % completion it would be. In July, given the lockdown, it was probably fairly close to completion.

    There are also 2 methods to determing completeness. Give a read of this and calculate both methods to see if it puts you under the $600k mark.

    • +1

      Either way, the developers were in the best position to know what the percentage completion was at the time OP entered into the contract, what percentage of costs were yet to be incurred, and how that would impact on net value at completion.
      Their representations were clearly not based on reasonable grounds given their access to that information, and the OP has a reasonable complaint IMHO.
      I think the OP should talk to his solicitor about this misrep.

      • You rightly understood my situation.. thanks mate 🙏!

    • Thanks for all the explanations! I did go through all this knowledge before signing the contract and this is how I learned how the stamps duty is calculated for off the plan or under construction building. And I can save stamp duty on this purchase.

      The sales against tricked me so beautifully by sharing the screenshot of texts confirming 0 duty with her boss that I fell for it.

  • +2

    Sounds like you need to lawyer up.
    But to be honest, if stamp duty is payable above 600k and the property is above 600k unfortunately you will have to pay.

    Good luck!

    • I know I have to pay it now but the problem is the way I have been made to pay. Despite raising all the alarms with everybody and ensure I don’t miss the bus, the developer tricked me to foot this bill!
      This I believe is wrong. The developer are the master of these calculations and as a customer you have to sometimes trust what they say. Off the plan purchase is always a sellers game and the contract is drafted to save the builder and kick the customers butt!

      • +2

        as a customer you have to sometimes trust what they say

        No, you should have a solicitor who can figure out what's going on and explain it to you. You shouldn't have to trust the developer.

        • Replied below..
          still learning how to share the link of an existing comment ;)

  • +3

    What did the solicitor you engaged to read over your contract before signing it say?

    • +7

      Getting legal advice after the 💩 hits the fan is always more exciting.

    • The solicitor said that the contract is a standard template used for off the plan apartments.

  • +5

    Why would you believe what a developers sales team tells you ? Their job is to get you to buy, why do you think their advice would be at any level that you can trust?

    You should of gotten a solicitor who you actually pay to give you sound legal advice, oh well, live and learn.

    • +1

      I did get the agreement reviewed by solicitor before signing an did mention that I will not be paying stamp duty as per communication from the developer. I was never advised anything to get it double confirmed/checked!

      I think I did what was in my capacity.

    • What a load of crap

      When I buy anything and ask the seller questions I expect the seller not to lie to me.

      The developer has misrepresented their product. I dunno what recourse the buyer has in this circumstance but there's no reason to victim blame someone who was trying to do their research and has been mislead.

  • +1

    The question is, if you knew you'd be up for around 1.5% stamp duty prior to buying, would you have given the property a miss? I wouldn't think so when you're spending nearly 650k on an apartment but interested in your answer none the less.

    • I had been looking for an apartment for last 6 months and was adamant not to pay any stamp duty. I would have given it a miss if the developer didn’t reduce the price of the apartment to cover my stamp duty liability!

  • I bought off the plan a few years back. It's not something i would necessarily recommend unless you're familiar with the pitfalls. In my case, I personally knew the developer.

    Laws in Victoria have changed regarding stamp duty.

    A stamp duty of $9k is pretty good if you ask me given a straight purchase would've potentially had you pay a lot more.

    Where I think you'll lose the argument with the developer is that it appears you're relying on WhatsApp message rather than the signed contract regarding stamp duty payments/conditions. They could easily say they were right in the situation where the price was under $600k.

    So it might be, as above, that your avenue of dispute or exploration would be the valuation to see if you can get one less than $640k.

    With reference to my situation again, I know a lot of real estate agents so had them all give me a price estimate for my property and I simply used the lowest value result for stamp duty purposes.

    It definitely sounds like you need assistance though, so like others have said, get help from a solicitor or at the very least read the sales contract as it might explain the process regarding valuations below / above $600k

    • The price of the apartment is set by the developer and they should know what they are talking about.. when we are discussing stamp duty liability on a property valued +650k..and when they say that the value for stamp duty calculation will be less than 600k based on %completion and hence there won’t be any duty payable which they confirmed on writing (though WhatsApp far better than verbal comms.)

      And I also got the contract reviewed by the solicitor who is still with me until settlement..

      what else should I have done?

      • +2

        WhatsApp far better than verbal comms

        This might be a generational thing but to my middle-aged mind, "written on Whatsapp" is only slightly more authoritative than "written on the wall of the gents".

  • +2

    Sounds like you made $40k on the unit before you’ve even moved in so what’s $9k? You’re still $31k up 😊

    • +3

      Independent valuation is theoretical. Try off-loading it on completion (when many others will as well) and see what you get. Also, need to take transaction costs into account.

      Pro tip: never buy off the plan. You have to be very lucky to make some money within a few years.

      • The rewards for offers the plan triumphs the problems with it when it comes to stamp duty savings!
        First home and off the plan is the best combination to save stamp duty for apartments/property valued more then 600k and the savings are more if the apartment is more expensive.. also, since the apartment was under construction, I felt I will not have to wait years for its completion!

    • Well, by the looks if it, I feel this is the only way I will be pacifying myself 😔!

  • Pro-Tip:

    Find a Lawyer in Melbourne for <$9K

  • +1

    "my solicitor confirmed that I will need to pay +9k for stamp duty as the dutiable value". Did you have the same solicitor review the contract initially? Since you have already engaged a solicitor they would be best to comment on any recourse available but I don't like your chances. With all the issues about poor quality apartment construction these days I'm not sure what the appeal of new builds are?

    • Yes, I am with the same solicitor who reviewed the contract before I signed. As I was approaching near settlement, I thought to clarify the stamp duty liability to avoid surprise on the settlement day! And I got this shock in advance and now trying to see how to fix it or to understand where did I go wrong?

  • Your solicitor appears to be doing a poor job. Surely they have the answers you seek

  • After rereading this thread why were you so hell bent on avoiding stamp duty?

    I know it's another tax we would all like to not have but nearly everyone pays it. Hell I've paid it 5 times. You just suck it up at the time just like income tax.

    Find a property you love, pay the tax and move on.

    • Mate your response doesn’t seem to be in the true esprit of OZBargain.

      A true OzBargain will never let any penny drop out of the pocket if it’s not required. I believe the idea of the forums like this is to spread awareness and educate people to protect themselves form malpractices in the industry.

  • complain to consumer affairs and report the developer with all your coumentation. mediation will be a pain. then you go to tribunal.get consumer affairs advice on the law on this.

    • Sorry for my ignorance, are u referring to ACCC or something else to start my complaint?

  • Can I report this shady practice of the developer anywhere ?

    The stamp duty part? I doubt anything helpful will come out of it.

    I personally don't trust sales team on anything financial. Is like, when I went for a rental inspection, I asked the REA to confirm the place did not have gas supply (no need to pay for gas). He said that's correct. Three months later I got a gas bill. There goes extra $5/week on gas supply I need to pay. Did he compensate? Nope.

    This not the end, they are also forcing me to settle on the due date (first week of Jan) despite the fact that all the variations mentioned in the contract is yet to happen.

    I would ask your solicitor if your contract has been met. It would be a case of not paying extra for the variation on settlement, rather than not paying the whole amount until variation is completed.

    Consider you note all defects at your place on settlement date, unless they are major defects you have settle anyways and chase up with builder afterwards. I am guessing VIC law is similar to NSW/ACT law in this regard. I would treat the variation not done falls under minor defects.


    • +1

      Thanks for the advice mate!

      I thought there would be something similar to ACCC to protect customers with shady practices in the real-estate industry and it’s sad that so far in the forum, not a single person seems to have done anything about this and hence these REA people keep cheating the customers..

      Regarding variations, they are the part of the contract and don’t have $ assigned to any of them.

      The variations include installation of air-con in the master bedroom and changing the shower-taps and shower heads in the bathrooms, which I believe shouldn’t fall under minor defects.

      The developer has so far always been saying things will be done before settlement but the work didn’t start until 29th Dec.

      • I find the elements of passing the buck between between sales team, the builder and developer on what you physically get.

        There is the consumer affairs Victoria for reporting this, but again I am not sure if you will get the desired effect. I went through Fair Trading NSW for my first property, because the builder didn't do any variation I asked for (they forgot, but took the money).. Fair Trading just act like a mediator and that's about it.

        • @NeutralName: What was the final outcome for you?
          Did you finally get the variations done for what you had paid? Was Fair trading fair enough with you?

          • +1

            @TheMills: I got the variations cost reduced after settlement since they said they won't do it, even my preference was to get them done. I was never gonna win at that .

            I also went to fair trade to deal with resolving the warranty defects, which the builder just kept ghosting us since settlement. It was only after Fair trading reached out to them that I got a long SMS with his tradies number to fix. Six long months of hassling. My neighbours didn't push as hard as I did and their defects were not fixed

            So yeah, that experience formed my view that I don't think incomplete variations is enough to stop the whole settlement. Also, I'm not sure what recourse the REA will have from consumers affair Vic by advising you about no stamp duty.. they can always blame the government or they underestimated the valuation blah blah. it is like they advertised the place as "ready to move in in 2019" and now is 2021. They will blame others.

            Maybe asks your solicitor to contact State Revenue Office for a waiver?

            All the best.

  • @NeutralName
    Thanks for sharing the update.. So, your persistence did pay-off!

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