What Stamp Duty Is and Why It Matters
Stamp duty — formally called land transfer duty in Victoria — is a state government tax charged on the purchase of property. It is calculated as a percentage of the property's purchase price or market value (whichever is higher) and is payable by the buyer, typically at settlement. In Victoria, stamp duty is one of the largest transaction costs in a property purchase: on a $750,000 property in 2026, duty is approximately $40,070. On a $1,200,000 property, it reaches $63,570. These are not marginal costs — they represent genuine capital that must be sourced before settlement.
Unlike the deposit (which becomes part of the purchase price), stamp duty is a sunk cost: it does not form part of your equity and is not recoverable if you sell the property. This asymmetry means that short-term property holding — buying and selling within 3–5 years — is difficult to make financially viable in Victoria, as the duty cost on entry plus agent fees on exit consume a substantial proportion of any nominal capital gain.
Victoria Stamp Duty Rates 2026
| Property Value | Duty Rate | Cumulative Duty |
|---|---|---|
| Up to $25,000 | 1.4% | Up to $350 |
| $25,001 – $130,000 | 2.4% | Up to $2,870 |
| $130,001 – $440,000 | 5% | Up to $18,370 |
| $440,001 – $550,000 | 6% | Up to $25,170 |
| $550,001 – $960,000 | 6% | Up to $49,870 |
| $960,001 – $2,000,000 | 5.5% | Up to $107,070 |
| Over $2,000,000 | 6.5% | 6.5% on total value |
Worked Examples: What You Actually Pay
| Purchase Price | Stamp Duty Payable | Duty as % of Price |
|---|---|---|
| $450,000 | $24,070 | 5.3% |
| $600,000 | $31,070 | 5.2% |
| $750,000 | $40,070 | 5.3% |
| $900,000 | $49,070 | 5.5% |
| $1,100,000 | $60,070 | 5.5% |
| $1,500,000 | $82,570 | 5.5% |
| $2,500,000 | $162,500 | 6.5% |
First Home Buyer Concessions
Victoria offers substantial stamp duty relief for eligible first home buyers, administered through the State Revenue Office.
Full Exemption (No Stamp Duty)
First home buyers purchasing a property valued at $600,000 or less pay zero stamp duty, provided the property will be their principal place of residence for at least 12 months commencing within 12 months of settlement. At $600,000, this exemption saves $31,070 — a significant reduction in upfront purchase costs.
Partial Concession
For properties valued between $600,001 and $750,000, a partial concession applies. The duty is reduced on a sliding scale — the closer to $600,000, the larger the concession. At $700,000 a first home buyer pays approximately $24,000 instead of the standard $36,070.
Off-the-Plan Concessions
Buyers purchasing off-the-plan (before construction completes) may be eligible for duty calculated on the land value only, not the completed dwelling value. The concession is complex — it depends on timing and whether the buyer will occupy the property — and should be verified with the SRO or a conveyancer before relying on it in financial planning.
Principal Place of Residence Requirement
First home buyer concessions require the property to become and remain your principal place of residence for a minimum of 12 months, commencing within 12 months of settlement. If you move out within this period, the concession may be clawed back. The SRO audits compliance. Investors purchasing their first property as a rental — rather than living in it — do not qualify for the first home buyer concession.
Foreign Purchaser Additional Duty
Foreign purchasers of Victorian residential property pay an additional 8% of the purchase price on top of standard stamp duty. A foreign purchaser is broadly defined as a person who is not an Australian citizen, permanent resident, or New Zealand citizen. Temporary visa holders — including most skilled migration and student visa holders — are foreign purchasers for this purpose. On a $750,000 purchase, the additional duty is $60,000, bringing total duty to approximately $100,000. This is a material cost that affects the economics of property purchase for migrants who have not yet obtained permanent residency.
When Is Stamp Duty Paid?
In Victoria, stamp duty is due at settlement — the date when the property legally transfers to the buyer. The settlement agent (conveyancer or solicitor) calculates the duty and lodges the return with the State Revenue Office on your behalf, deducting the amount from the settlement funds. You do not receive a separate bill to pay later. This means the full duty amount must be available in your settlement funds — typically your deposit plus additional cash — before settlement can proceed.
Stamp Duty vs Land Tax: The Distinction
Stamp duty is a one-time transaction cost. Land tax is an annual state government charge on property you own as of 31 December each year, calculated on the site value (land only, excluding improvements). Land tax applies to all land except your principal place of residence. In Victoria, the land tax threshold is $300,000 of site value — below this amount, no land tax applies. Above it, rates range from 0.1% to 2.55% of site value. Most investment property owners in Melbourne pay land tax annually; the amount varies significantly by location and land size.
Frequently Asked Questions
Can I include stamp duty in my mortgage?
Generally no — stamp duty must be paid at settlement from your own funds and cannot be borrowed as part of a standard residential mortgage. Some lenders offer limited exceptions through equity products or bridging facilities, but these are not standard mortgage products and typically carry higher interest rates. The practical implication is that you need stamp duty cash in addition to your deposit when calculating how much you need to purchase a property. On a $750,000 property with a 10% deposit ($75,000), you need $75,000 plus $40,070 stamp duty plus approximately $3,000 in legal and inspection costs — total upfront requirement of approximately $118,000.
Is the foreign purchaser additional duty charged on top of standard rates?
Yes, it is additional. A temporary visa holder purchasing a $750,000 property pays standard stamp duty of $40,070 plus foreign purchaser additional duty of $60,000 (8% × $750,000) — total $100,070. Obtaining permanent residency before purchasing eliminates the foreign purchaser surcharge entirely. For migrants in the process of applying for PR, timing a property purchase to occur after PR grant can save tens of thousands of dollars in duty costs. New Zealand citizens are exempt from the foreign purchaser surcharge under the Trans-Tasman relationship — they pay only standard duty.
Does stamp duty apply to transfers between family members?
Transfers between spouses or domestic partners following relationship breakdown are generally exempt from duty. Transfers for estate administration purposes (death of the owner) also have specific exemptions. Transfers between other family members — parent to child, sibling to sibling — are generally dutiable at standard rates unless a specific exemption applies. The State Revenue Office publishes guidance on all exemptions. A conveyancer should review any family property transfer before it proceeds to confirm the duty position.