New State Revenue Office Concession for those purchasing commercial and industrial properties in regional areas
by Sarah Coombs
As of 1 July 2019, the State Revenue Office is offering a concession for those purchasing land in regional areas for commercial, industrial of extractive purposes. These contracts must be entered into on or after 1 July 2019. This financial year, qualifying purchasers will be entitled to a 10% concession. This amount will continue to increase by 10% each financial year until it caps at a 50% concession on 1 July 2023.
To qualify for the concession, purchasers must be either:
- Purchasing land
- Acquiring a life interest in land
- Acquiring a land use entitlement
This concession can only be used in regional areas, including Strathbogie Shire, Mitchell Shire and Macedon Ranges Shire Council. A full list of eligible municipalities can be found on the State Revenue Office website.
Further, the purchaser must use the land for a qualifying use for at least 12 month period, within the first 2 years of owning the property. There are many qualifying uses, but essentially the property must be used for commercial (retail outlets, office spaces and restaurants) industrial (factories and warehouses) or extractive purposes (mines, quarries, or underground water sources).
Unfortunately, this concession cannot be used in conjunction with any other stamp duty concession. The purchaser must decide which concession better suits their needs and circumstances, and forgo applying for the other.
Example 2: Maddie the Manufacture
Maddie designs clothes, and wants a premises to start producing her clothing items on a larger scale. In October 2019, she purchasers a factory in Romsey for $300,000. The stamp duty charge on the transfer of this property is calculated as $11,763. In November 2019 she moves her production into the factory. As of November 2020 she is still producing her clothing in the factory. Had the concession not being in place, duty would have been $13,070.
Example 2: Cheasley the Chef
Cheasley is a chef, and wants to open her own cafe. In August 2019, she purchases a vacant land in the centre of Seymour for $250,000. Chelsey wants to build a cafe on the land. Duty is calculated at $9,063 ($10,070 reduced by 10% to allow for the new concession).
Chelsey settles on the land in September 2019, and begins construction of the café in October 2019. Construction is completed in April 2020, at which time Chelsey begins to operate the café. The café is still running in April 2021, and therefore Chelsey has met the use requirement as she has used the land of a qualifying use for a continuous 12 month period within 2 years of owning the property.
Should you have any questions regarding the new concession, we recommend you contact one of our office to speak to one of our property lawyers or conveyancers.