Why Timing Matters: How Construction Stage Affects Stamp Duty

With Victoria’s off-the-plan stamp duty rules, the timing of your contract can make a major difference to your costs. When you buy earlier in construction, a larger portion of the build is still unincurred, which can reduce the dutiable value for eligible principal place of residence and first home buyers. This guide walks through three clear worked examples, a simple comparison table and a practical checklist you can take to your conveyancer. We’ve designed this guide to assist first-home buyers and owner-occupiers who want to understand how timing can affect their stamp duty outcome.

For off-the-plan purchases in Victoria, the dutiable value is often calculated as:

Contract price minus construction costs that have not yet been incurred at the contract date.

The earlier you sign, the more of the construction usually sits in that unincurred category, which can mean a lower dutiable value if you qualify for principal place of residence or first home buyer concessions. Investors usually do not receive this off-plan concession and often pay duty on the full contract price however, until October 2026, these savings have been extended to investors. Buyers should always confirm their position with a qualified adviser or conveyancer.

The Stage-of-Construction Model

A simple way to think about timing is to group construction into three broad stages.

• Early: Site preparation and basement works. At this point, a high portion of the total build cost is still unincurred.
• Mid: Structure is up, services are in the rough-in stage and internal layouts are visible. A medium portion of the cost is unincurred.
• Late: Finishes, joinery, painting and landscaping are underway or close to completion. Only a smaller slice of the cost remains unincurred.

This model is simplified, yet it helps show why the same apartment can attract very different dutiable values depending on when you sign the contract.

Worked Example Set (same price, different timing)

To keep things clear, each example uses the same contract price of $700,000. Figures are approximate and for illustration only.

Example A — Early Stage (largest potential saving)

1. Contract price: $700,000
2. Estimated un-incurred construction at contract: $420,000
3. Dutiable value: $700,000 − $420,000 = $280,000
4. Indicative duty:
   FHB- $280,000 → $0
   OO- $280,000 → $10,370
5. If the buyer is an eligible first home buyer or PPR purchaser within the thresholds, the duty may be reduced significantly or even fall to $0.

Example B — Mid Stage

1. Contract price: $700,000
2. Un-incurred construction: $280,000
3. Dutiable value: $420,000
4. Approximate stamp duty:
   FHB- $420,000 → $0
   FHB- $420,000 → $20,270
5. Here, the dutiable value is higher than in Example A, so the buyer pays more duty even though the contract price has not changed.

Example C — Late Stage

1. Contract price: $700,000
2. Un-incurred construction: $120,000
3. Dutiable value: $580,000
4. Approximate stamp duty:
   FHB- $580,000 → $0
   OO- $580,000 → $29,870
5. This buyer pays the highest duty of the three because most of the construction cost has already been incurred at the contract date.

Key takeaway: It is the contract date and stage of construction that change the duty outcome, even when you pay the same price for the apartment.

Side-by-Side “Savings Delta” Table

Indicative only. Figures are for illustration and buyers should confirm their position with a qualified adviser.

How to Get the Right Numbers (without the guesswork)

You do not need to estimate construction costs on your own. In a well-run off-the-plan project, the developer should be able to provide you with construction stages or even the approximate stamp duty figures. Your conveyancer will also have access to these figures to assist you at settlement. 

Who Actually Benefits Most?

• Principal place of residence and first home buyers: These buyers often see the largest upside because they can access both the off-the-plan concession and first home buyer thresholds.
• Downsizers moving into a new PPR: Where price and timing line up, downsizers can reduce stamp duty and free more equity for lifestyle or investment.

Common Misconceptions

• “Stamp duty is based on the bank valuation at settlement.”
  In many OTP cases, duty is based on the dutiable value at the contract date, not the bank valuation when you settle.
• “Off the plan means $0 duty for everyone.”
  Concessions only apply where you meet the eligibility rules and price thresholds. 
• “Furniture packs or upgrades reduce dutiable value.”
  Only eligible building works count toward unincurred construction. Extras like furniture packs usually sit outside the duty calculation, so always check with your conveyancer.

Buyer Playbook: Lock In Savings (step-by-step)

1. Complete a finance readiness check with a broker so you know your borrowing limit and timeframes.
2. Ask a conveyancer to review the contract, confirm your PPR or FHB status and apply the OTP concession correctly.
3. Confirm the contract date, keep the cost breakdown letter and duty estimate on file.
4. If anything material changes before settlement, ask your conveyancer to re-check your duty position.

Mini Case Notes

Case 1: FHB couple at the basement stage
Amelia and Charlie wanted a first home in a growth suburb near transport and cafés. They found an off-the-plan apartment at the basement stage with a $650,000 contract price. The developer provided a cost breakdown that showed a large portion of the build still unincurred. Their conveyancer confirmed that, within the current first home buyer thresholds, their dutiable value fell low enough that the duty payable was $0. Signing early freed cash for furnishing and a small renovation fund.

Case 2: PPR buyer comparing mid versus late stage
Henry planned to move from a townhouse into a larger apartment closer to work. He first viewed the project when the structure was up and services were in, yet he hesitated. His conveyancer modelled duty at both mid-stage and a likely late-stage figure using the same contract price. The difference in dutiable value translated to several tens of thousands in extra duty if he waited. Henry decided to proceed at mid-stage so he could preserve savings for retirement planning rather than hand them over in taxes. For example, if Henry were interested in purchasing a $700,000 apartment and purchased halfway through construction, he would pay approximately $15,620 in stamp duty; however, if he waited until completion, he would pay approximately $37,070 in stamp duty. 

Checklist 

• Contract date confirmed and noted.
• First home buyer eligibility is checked against current thresholds.
• The conveyancer has applied the OTP method and confirmed the dutiable value in writing.
• Foreign purchaser status is assessed if relevant to you.

FAQs

Do investors get the OTP concession?
In most cases, investors do not receive the PPR off the plan concession and duty is calculated on the full contract price. However, in Victoria, the current OTP stamp duty savings model has been extended to investors until October 2026.

Can my dutiable value be $0?
Yes, for some eligible first home buyers within specific price thresholds dutiable value for duty purposes can effectively be treated in a way that results in no duty. Your conveyancer will confirm if you qualify.

What if the build is already about 80% complete?
At a late stage, there is usually less unincurred construction, which means a higher dutiable value. You may still receive a concession, however, it is often smaller than if you had signed earlier.

Does changing to rent out later affect my PPR concession?
If you claim a PPR concession, you usually need to meet occupation and timing requirements. If you decide to rent the property out instead, this can affect your concession. Always speak with your conveyancer or tax adviser before changing your plans.

If you are exploring an off-the-plan purchase in Melbourne and want to understand how timing can shape your stamp duty outcome, Norus Projects can help. Explore opportunities at Beach Point Sandringham, Sanctuary Sandringham, Park View Burwood and Riverbend Ivanhoe and speak with our team about how we can work with your adviser so you can make an informed decision.

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