How to Save on Stamp Duty in Victoria by Buying Land and Building Later

Land

Stamp duty is one of the biggest upfront costs when buying property in Victoria. It is a government tax charged on the value of the property you are purchasing, and for many buyers it can add tens of thousands of dollars to the cost of getting into the market. The good news is there is a way to save. Instead of purchasing a completed house and land package, you can buy the land first and then build your home later. This simple shift can mean a huge difference in the stamp duty you pay.

Here is how it works. Stamp duty in Victoria is calculated on the dutiable value of the property at the time of settlement. If you buy a block of land for $300,000, your duty is worked out on $300,000. If you then go on to build a home that costs $500,000, you do not pay any additional duty on that amount because the tax was already assessed when you bought the land. But if you buy a bundled house and land package with a total contract price of $800,000, you are taxed on the full $800,000.

To put it simply, a house and land package valued at $800,000 could mean stamp duty of around $43,000. Buying the land separately at $300,000 might bring the duty closer to $6,000. When you later spend $500,000 building, no more duty applies. That is a potential saving of $37,000.

The important detail is how the contracts are structured. Some advertised house and land packages are actually two separate contracts, one for the land and one for the build. If that is the case, the stamp duty only applies to the land portion. But if it is genuinely one contract that bundles both together, the duty is charged on the entire amount. Having a professional check your paperwork is essential to make sure you get the benefit.

There are a few more factors to think about. First home buyers may also qualify for concessions or exemptions on stamp duty, so those rules should always be considered. Your lender may have conditions about how quickly you need to start building after buying land, often between 12 and 24 months. You will also need to plan for holding costs like loan repayments, rates, and potentially land tax. On the positive side, if land prices rise while you are waiting to build, you may enjoy some capital growth before the home is finished.

This is where having the right guidance matters. As your mortgage broker, I can walk you through how to structure your finance so you maximise savings and stay on top of your cash flow. I work with buyers across Victoria who want to get the most from their property purchase and avoid paying more stamp duty than necessary. With the right planning, you can free up thousands of dollars that can be used for your build, landscaping, or simply keeping your budget under control.

If you are looking at buying land and then building later, get in touch. I can show you how the numbers work for your situation and help you secure the right loan structure to make it happen smoothly.