The key insight: When you buy land and build separately, you only pay stamp duty on the land — not the construction cost. This can save you $20,000–$40,000 compared to buying an established home of the same value.
Stamp duty (officially called “land transfer duty” in Victoria) is one of the largest upfront costs when buying property. But the rules change dramatically when you build instead of buy.
Stamp Duty Rates in Victoria (2026)
Standard Rates (Not First Home Buyer)
| Property Value | Stamp Duty | Effective Rate |
|---|---|---|
| $130,001 – $440,000 | $2,870 + 5% of amount over $130,000 | ~3.5–5% |
| $440,001 – $550,000 | $18,370 + 6% of amount over $440,000 | ~5–5.5% |
| $550,001 – $960,000 | $28,070 + 6% of excess | ~5.5% |
| $960,001+ | 5.5% of total value | 5.5% |
First Home Buyer Concessions
| Land/Property Value | Stamp Duty | Saving |
|---|---|---|
| Up to $600,000 | $0 (full exemption) | Save up to $31,070 |
| $600,001 – $750,000 | Reduced rate (sliding scale) | Partial saving |
| Over $750,000 | Standard rate applies | No concession |
The Building Advantage: Pay Stamp Duty on Land Only
This is the single biggest financial advantage of building over buying:
Example 1: Western Melbourne
| Buying Established | Building New | |
|---|---|---|
| Total value | $650,000 | $650,000 |
| What stamp duty is calculated on | $650,000 (full price) | $280,000 (land only) |
| Stamp duty payable | $34,070 | $10,070 |
| You save | — | $24,000 |
Example 2: First Home Buyer
| Buying Established $550K | Building New (land $250K + build $300K) | |
|---|---|---|
| Stamp duty on | $550,000 | $250,000 |
| First home buyer? | Partial concession (~$12K) | Full exemption ($0) |
| FHOG eligible? | No (established) | Yes ($10,000) |
| Total upfront saving | — | ~$22,000 |
Example 3: Upgrader (Not First Home Buyer)
| Buying Established $900K | Building New (land $400K + build $500K) | |
|---|---|---|
| Stamp duty on | $900,000 | $400,000 |
| Stamp duty payable | $49,070 | $18,370 |
| You save | — | $30,700 |
See your stamp duty savings
Our calculator shows the full picture — build cost, stamp duty on land only, and FHOG if eligible.
How It Works
- Buy the land first — you pay stamp duty on the land value only
- Sign a building contract separately — the building contract is NOT subject to stamp duty
- Important: The land and build must be separate contracts. If you buy a “house and land package” as a single contract, stamp duty may apply to the full amount
The Two-Contract Rule
For the stamp duty saving to apply:
- You must purchase the land under one contract
- You must sign a separate building contract with a builder
- The land must be purchased before construction begins
- If the developer is both selling the land AND building the home as a single transaction, the ATO/SRO may treat it as a single purchase
Stamp Duty Calculator
| Land Value | Stamp Duty (Standard) | Stamp Duty (First Home Buyer) |
|---|---|---|
| $200,000 | $7,070 | $0 |
| $250,000 | $8,750 | $0 |
| $300,000 | $10,070 | $0 |
| $350,000 | $13,070 | $0 |
| $400,000 | $16,070 | $0 |
| $450,000 | $18,970 | $0 |
| $500,000 | $21,970 | $0 |
| $550,000 | $25,070 | $0 |
| $600,000 | $31,070 | $0 (max exemption) |
| $650,000 | $34,070 | ~$10,350 |
| $700,000 | $37,070 | ~$20,700 |
| $750,000 | $40,070 | ~$31,050 |
Off-the-Plan Concessions
If you’re buying an apartment or townhouse off-the-plan in Victoria, you can claim a stamp duty concession on the “land” component of the purchase. The dutiable value is reduced by the construction cost that has not yet been incurred at the contract date.
This means:
- The earlier you buy off-the-plan (before construction starts), the more you save
- The concession is automatic — your conveyancer calculates it
- It applies to both first home buyers and non-first home buyers
Common Questions
Do I pay stamp duty on the construction cost?
No — if you have separate contracts for land purchase and building. The building contract is not subject to stamp duty in Victoria. This is the key advantage of building.
When do I pay stamp duty?
Stamp duty is due within 30 days of settlement (when you receive the title to the land). Your conveyancer handles the payment as part of the settlement process.
Can I get both the stamp duty exemption and the FHOG?
Yes. First home buyers building a new home can receive:
- Stamp duty exemption (land value up to $600,000)
- First Home Owner Grant ($10,000)
- These are separate benefits and you can claim both
What about the off-the-plan concession for houses?
The off-the-plan concession typically applies to apartments and townhouses purchased before completion. For standalone houses, the two-contract approach (separate land + build contracts) achieves a similar result.
Is there a foreign purchaser surcharge?
Yes — foreign purchasers pay an additional 8% surcharge on top of standard stamp duty rates. This applies to both land and established property purchases.
Rates current as of April 2026. Based on State Revenue Office Victoria guidelines. Stamp duty rules are complex — always get advice from a conveyancer or solicitor for your specific situation.
Related Guides
- First Home Owner Grant Victoria — $10,000 grant details
- Cost to Build a House in Melbourne — Full cost breakdown
- Stamp Duty NSW — If you’re comparing Sydney
- Build vs Buy — Which Is Smarter? — Full comparison
