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.
Most people don’t realise this until their conveyancer mentions it. Stamp duty — or “land transfer duty” as Victoria officially calls it — is one of the biggest upfront costs when buying property. But if you build instead of buy, you pay duty on the land price alone. The construction cost? Not dutiable.
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 where building pulls ahead. Look at the actual numbers:
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
Not complicated, but you need to get the paperwork right.
- 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
This is the part where people trip up. For the saving to work:
- You need one contract for the land purchase
- You need a separate building contract with your builder
- The land settlement has to happen before construction starts
- If a developer is selling you the land and building the home as a bundled deal, the SRO can treat it as a single purchase — and you’ll pay duty on the lot
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
Buying an apartment or townhouse off-the-plan? Victoria lets you claim a concession on the “land” portion of the purchase. The SRO reduces the dutiable value by whatever construction hasn’t happened yet at the date you sign.
That means buying earlier saves you more. If you sign before a single slab is poured, the construction component is larger and your duty bill is smaller. Your conveyancer works out the split — you don’t need to calculate it yourself. The concession applies whether you’re a first home buyer or not.
Common Questions
Do I pay stamp duty on the construction cost?
No. As long as you have separate contracts for the land purchase and the build, the building contract isn’t dutiable. That’s the whole reason building saves you so much upfront.
When do I pay stamp duty?
Within 30 days of settlement — that’s the day you get the title to the land. In practice, your conveyancer handles it as part of the settlement process, so you won’t need to remember the deadline yourself.
Can I get both the stamp duty exemption and the FHOG?
Yes, and this is where first home buyers really come out ahead. You can stack both:
- Stamp duty exemption (land value up to $600,000)
- First Home Owner Grant ($10,000)
They’re separate schemes with separate eligibility. Claiming one doesn’t affect the other.
What about the off-the-plan concession for houses?
It’s really designed for apartments and townhouses bought before completion. If you’re building a standalone house, you don’t need it — the two-contract approach (separate land purchase + separate build contract) gets you the same outcome, often a better one.
Is there a foreign purchaser surcharge?
Yes. Foreign purchasers cop an extra 8% surcharge on top of standard rates. It applies to land and established property alike — there’s no way to avoid it by choosing one over the other.
Rates current as of April 2026, based on State Revenue Office Victoria guidelines. Your situation will have details we can’t cover here — talk to a conveyancer or solicitor before making decisions based on these numbers.
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
