The Role of Construction Costs in Determining Off-the-Plan Concessions

Buying off the plan offers more than just the opportunity to secure a brand-new home. For many buyers, it also opens the door to valuable stamp duty concessions. But what influences the amount of concession you receive? One of the most important factors is construction costs.

In this guide, we explain how construction costs play a role in determining the dutiable value of a property and how that impacts your eligibility for off-the-plan concessions in Australia.

Understanding Dutiable Value

The dutiable value of a property is what state revenue offices use to calculate how much stamp duty you pay. When buying off the plan, the dutiable value is usually based on:

• The value of the land
• The cost of completed construction work at the time of contract

This is different from buying an existing property, where duty is calculated on the full purchase price. If a significant portion of the construction is still to be completed at the time of purchase, you could receive a substantial discount on the stamp duty payable.

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How Construction Timing Affects Stamp Duty

Off-the-plan concessions are only available if construction has not been substantially completed when the contract is signed. The earlier you buy in the development timeline, the lower your dutiable value is likely to be. That is because the contract only includes the value of the land and whatever work has already been done.

This can result in savings of thousands of dollars in stamp duty for buyers who get in early. It is especially beneficial in cities like Canberra where property prices are steadily rising.

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Construction Costs and Concession Calculations

The higher the estimated construction costs, the more value is attributed to the building rather than the land. However, if little or none of the construction has commenced at the time of sale, that value is excluded from the dutiable calculation.

Let’s break it down:

• Lower dutiable value = higher stamp duty concession
• Earlier purchase = more incomplete construction work
• More incomplete work = more of the contract value is considered exempt

This is why it pays to understand the development timeline and get legal advice before purchasing. Your solicitor can confirm whether you are eligible for off-the-plan duty concessions and how much you are likely to save.

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Why Buyers Should Factor This Into Their Budget

For many first-home buyers, stamp duty can be a major upfront cost. Accessing concessions can make a big difference in how much you need to save or borrow. By choosing a property early in the development phase, you may be able to put more of your budget toward the deposit or upgrades instead of government charges.

This is where Coposit can help. Coposit gives eligible buyers the chance to secure off the plan properties across Australia with just $10,000 upfront, and the rest paid off in weekly instalments while the property is being built. This approach works perfectly alongside off-the-plan stamp duty concessions, allowing buyers to maximise their savings and get into the market sooner.

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Getting Professional Advice Matters

Every state and territory in Australia has different rules around stamp duty and concessions. In the ACT, for example, concessions are available for eligible buyers under certain income thresholds. In other states like Victoria and New South Wales, the rules differ based on property value and whether the buyer is a first-home purchaser.

It is important to speak with a property lawyer or conveyancer who understands local legislation. They can assess your eligibility for off-the-plan benefits and make sure you understand all associated costs before you commit.

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Maximise Your Savings When Buying Off the Plan

Construction costs are more than just a developer concern. They directly affect how much stamp duty you pay and the size of any concession you might receive. For buyers, especially those trying to enter the market with a tighter budget, understanding how these costs influence dutiable value can unlock thousands in potential savings.

By purchasing earlier in the process and exploring flexible pathways like Coposit, buyers can reduce upfront costs and take full advantage of government concessions. To learn more about off the plan opportunities and low-deposit options, visit coposit.com.au.

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