House and Land Packages – what you NEED to know about duty!

Section 19(2) of the Duties Act 2001 governs the amount of duty you will pay on house and land packages in certain circumstances. This can be a great benefit to you as a purchaser.

Under section 19(2), when entering into a build contract for a house and land package, stamp duty is calculated on the land value plus the value of any improvements at the time of signing the contract – rather than the determined value at the end of the build. This could potentially save you thousands of dollars!

In order to accurately determine what your duty will be at settlement date, there needs to be an agreed value of the land and an agreed upon value of any improvements. Alternatively, you can have a private valuation undertaken as at the time of signing the contract to determine the value of the land and improvements at the time of signing.

 

The following do not constitute improvements in relation to a dutiable property:

  • Works that are necessary for or related to the preparation of the build site (enabling construction to begin) on which a single home is to be constructed on the dutiable property;
  • Works that are preliminary to the construction of the single home, including excavation works, levelling of land, and removal of vegetation; and
  • Underground infrastructure and its installation, including, but not limited to, installation for the purposes of electricity, water, sewerage, or telecommunication services.

 

Assess your eligibility under section 19(2) using the below criteria:

  • The Vendor (or other related persons) starts to build a freestanding single home (other than a flat, home unit, or other similar building) which complies with the Building Act 2016 on the land after the contract was signed
  • There was no pre-existing building which could be legally recognised as inhabitable at the time the agreement was entered into

 

If you have any questions about section 19(2), or would like more information, please contact us!

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