Summary of key changes arising from the State Budget
The off-the-plan stamp duty concession, which was due to expire on 30 June 2017, has been extended to 30 June 2018. However, the concession will no longer be available to foreign purchasers that enter into an off-the-plan contract on or after 22 June 2017.
A $10,000 grant will be provided to eligible off-the-plan apartment purchasers where the contract is entered into between 22 June 2017 and 30 September 2017.
A five year land tax exemption will apply to eligible properties bought off-the-plan where the contract is entered into between 22 June 2017 and 30 June 2018.
An additional stamp duty surcharge of 4% will apply to foreign purchasers of South Australia residential property.
Stamp Duty Concession
The State Government has extended the period for the state wide off-the-plan stamp duty concession to 30 June 2018. The concession will apply to purchases of off-the-plan apartments located anywhere in South Australia for contracts entered into between 20 June 2016 and 30 June 2018.
Foreign purchasers entering into contracts on or after 22 June 2017 will not be eligible for the stamp duty concession.
Pre-Construction Grant for Off-the-Plan Apartment Purchasers
Purchasers who enter into a contract to purchase off-the-plan apartments between 22 June 2017 and 30 September 2017 may be eligible for a $10,000 grant.
This is a short term measure and to be eligible for the grant, the contract must be entered into before construction of the apartment building complex commences. If construction of the building has commenced Revenue SA has advised the purchaser will not are not eligible for the grant.
Revenue SA will be publishing further information regarding applications for the grant shortly.
The grant will not be available to foreign purchasers.
Five Year Land Tax Exemption
Apartments purchased off-the-plan between 22 June 2017 and 30 June 2018 will be exempt from paying land tax during the first five financial years following the purchase.
The exemption will cease to apply and will not be “transferred” if the apartment is sold within the five year exemption period.
The exemption will not be available to foreign purchasers.
Foreign Purchaser Stamp Duty Surcharge
Foreign purchasers of property in South Australia will be required to pay a surcharge of 4% of the dutiable value of the property.
The surcharge will apply to contracts entered into on or after 1 January 2018.
Foreign purchasers includes a foreign national who is not an Australian citizen or a permanent resident of Australia. It also includes corporations incorporated overseas or where 50% or more of the shareholding is held by foreign persons, companies or trusts.
The change brings South Australia into line with Victoria, Queensland and New South Wales in imposing a surcharge on foreign purchasers of property. The relevant rates are listed below.
4% stamp duty surcharge
3% stamp duty surcharge
4% stamp duty surcharge
1 January 2018
7% stamp duty surcharge
City of Adelaide - Council Rates relief
Whilst not part of the announcements in the State Budget, the City of Adelaide Council, last month announced that all owner occupiers who purchase an off-the-plan residential property within the City of Adelaide in the next two years will be exempt from paying Council rates during the first five financial years following the purchase.
Many industry experts within the property sector have welcomed the majority of these supply based changes arising from the State Budget. Some have however questioned the stamp duty surcharge on foreign purchasers as it could have a detrimental impact in attracting all important foreign investment to the State.
If you have any queries in relation to these changes please contact Sam Richardson.