First-Home Buyer? You Might Be Paying $12K Too Much in Stamp Duty

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With Victorian house prices now pushing well beyond prior medians—and first-home buyers consistently priced out of “concessional” brackets—the Victorian Revenue Office (VRO) has launched a review of stamp duty thresholds, with public feedback due by 30 June 2025.

This long-overdue process could reshape how much duty buyers pay, particularly for entry-level purchases. The existing thresholds—many set over a decade ago—are now misaligned with real-world values in almost every Melbourne suburb and regional growth area.

At present:

  • The $600,000 threshold for full stamp duty exemption for first-home buyers is commonly exceeded by even modest units and townhouses.

  • The concessional range between $600,001 and $750,000 offers only partial relief—and frequently excludes properties within commuting range of Melbourne.

  • Investment properties receive no bracket relief unless part of limited off-the-plan or regional schemes.

This review follows pressure from both the industry and consumer groups. Notably, REIV and PIPA have argued that static thresholds disadvantage young buyers and distort the market. Even banks have supported indexation, given rising borrowing constraints under APRA’s serviceability buffer.

The VRO has confirmed the scope of the review will consider:

  • Bracket indexation, possibly tied to median value increases;

  • Adjustments to off-the-plan valuation rules;

  • Expanded eligibility for concession or exemption zones;

  • Broader relief structures for downsizers and intergenerational transfers.

It’s a significant moment. Victorian stamp duty generates over $8 billion annually—almost a third of the state's tax revenue. Any bracket reform will have material budget impact. Yet the inequity is undeniable: buyers are paying modern prices, taxed at brackets set in a very different market.

From a conveyancing perspective, this review is more than academic. We’re already fielding regular client enquiries from first-home buyers who are surprised to find that their $630,000 townhouse attracts $12,000+ in duty—despite government messaging about “first-home exemptions”.

Clear, timely information is key. Buyers signing contracts before any reform should not assume retrospective relief. Practitioners should ensure clients are briefed on the current threshold rules, and encouraged to lodge formal feedback if they believe current settings are outdated.

Submissions can be made online through the Victorian Treasury’s public consultation portal.

Reforms are not expected to be enacted until late 2025, but draft legislation could emerge as early as Q4 this year. Whether reform is broad or incremental, it will shape contract negotiations, finance timelines, and property targeting strategies across the board.