How does stamp duty impact your total budget when building a new home?

How stamp duty is calculated for house and land packages

For many house and land packages in Victoria, stamp duty is calculated on the land value rather than the full cost of the completed home. Because buyers typically enter separate contracts for the land purchase and the construction agreement, land transfer duty generally applies only to the land component at settlement.

This structure can reduce upfront stamp duty costs compared with buying an established home, where duty is usually calculated on the full property value.

The total amount payable will depend on factors such as:

• The land purchase price
• Buyer eligibility for concessions or exemptions
• Current Victorian stamp duty rates
• Whether the property will be used as a principal place of residence

For buyers building a new home, this approach may help reduce the overall upfront budget required before construction begins.

Comparing total costs: New build vs established home

The total upfront costs involved in building a new home can differ significantly from buying an established property. Stamp duty is one of the key factors that may influence the overall budget, particularly when comparing house and land packages with completed homes.

For many buyers in Victoria, building a new home may help reduce upfront stamp duty costs while providing greater control over home design, inclusions and long-term maintenance expenses.

How stamp duty affects your deposit and borrowing

Stamp duty can significantly increase the amount buyers need upfront when purchasing land or building a new home in Victoria. Because stamp duty is usually paid alongside the deposit and settlement costs, buyers often need tens of thousands of dollars more than the purchase price alone.

For example, a buyer purchasing vacant land for $350,000 in Victoria may pay around $17,000 in stamp duty, depending on eligibility for concessions. If the same buyer is purchasing an established home valued at $750,000, stamp duty costs could exceed $40,000. These additional costs can directly affect savings goals, borrowing capacity and the amount required before settlement.

Alongside stamp duty, buyers may also need to budget for:

• A deposit of 5% to 20%
• Conveyancing and legal fees
• Mortgage registration costs
• Loan establishment fees

Because lenders assess a buyer’s available savings and overall financial position, higher upfront costs may also influence borrowing power and loan approvals.

For eligible first home buyers, stamp duty concessions or exemptions may help reduce the upfront costs and improve affordability when building a new home.

Other costs to consider when building a home

Building a new home involves more than just land and construction costs. Buyers also need to budget for additional expenses that can affect the total amount required upfront throughout the building journey.

Additional costs buyers should plan for:

• Site costs – Costs related to preparing the land for construction, including soil conditions, slope and connections.
• Conveyancing and legal fees – Professional fees associated with contracts, land settlement and property transfer requirements.
• Stamp duty and government charges – Land transfer duty, registration fees and other property-related charges payable at settlement.
• Home loan and lender fees – Mortgage establishment costs, valuation fees and lender charges may apply when securing finance.
• Upgrades and inclusions – Buyers may choose additional design upgrades, fixtures or personalised features during the building process.
• Landscaping and external works – Driveways, fencing, gardens and outdoor areas are sometimes excluded from base building costs.
• Moving and setup expenses – Utility connections, insurance and moving costs can add to the overall budget before moving into the home.

Factoring these expenses into the budget early can help buyers prepare more confidently for the full cost of building a new home in Victoria.

How to reduce the impact of stamp duty on your budget

Although stamp duty can add a significant upfront cost when building a new home, there are several ways buyers may be able to reduce the overall financial impact.

Ways buyers can reduce stamp duty costs:

• Consider a house and land package: In many cases, stamp duty is calculated on the land value only rather than the completed home value.
• Check eligibility for concessions or exemptions: First home buyers in Victoria may qualify for reduced stamp duty or a full exemption depending on the property value.
• Buy within concession thresholds: Purchasing within eligible price ranges may help reduce the amount of duty payable.
• Use a stamp duty calculator early: Using a stamp duty calculator to estimate costs before purchasing can help buyers budget more accurately and avoid unexpected expenses.
• Plan savings before settlement: Preparing for stamp duty alongside deposits and legal fees may reduce financial pressure during the building process.
• Seek guidance from finance professionals: Conveyancers, brokers and lenders can help buyers better structure their purchase and identify potential savings opportunities.

Taking a proactive approach to stamp duty planning can help buyers manage upfront costs more effectively when building a new home in Victoria.