How Victorian Land Transfer Duty Works in FY 2025-26
Victoria's land transfer duty is administered by the State Revenue Office of Victoria and uses a different bracket structure to NSW — most notably a flat 5.5% band that runs across a wide swathe of metropolitan Melbourne price points, plus a 6.5% premium tier for transactions above $2 million.
The FY 2025-26 Bracket Structure
For dutiable transactions of residential property by Australian buyers:
- Up to $25,000: 1.4%
- $25,001 – $130,000: $350 + 2.4% on excess
- $130,001 – $960,000: $2,870 + 6.0% on excess
- $960,001 – $2,000,000: flat 5.5% of the entire dutiable value (not marginal)
- Above $2,000,000: $110,000 + 6.5% on excess
The flat band between $960k and $2M is the unusual feature. Below $960k, duty is calculated cumulatively. At exactly $960,001, the calculation resets and duty becomes 5.5% of the whole value — creating a small "notch" where buying at $959,999 saves a few hundred dollars versus $961,000.
First Home Buyer Concessions
- Full exemption for principal-place-of-residence purchases up to $600,000
- Phase-in concession from $600,001 to $750,000
The phase-in formula: Duty payable = standard duty × (price − 600,000) / 150,000. So at $675,000 (midpoint), the buyer pays half the standard duty. At $749,000 they pay approximately 99.3% of standard duty. At $750,001, the concession disappears entirely.
The buyer must occupy the property as their PPR for a continuous 12 months commencing within 12 months of settlement.
Foreign Purchaser Additional Duty
Foreign purchasers of residential property pay an additional 8% surcharge on the dutiable value. Trusts with foreign beneficiaries are caught unless specifically excluded — a trap for family trusts that have not had their deeds reviewed.
Worked Example: $1,200,000 Melbourne Purchase
The price falls inside the flat 5.5% band, so the duty is simply:
$1,200,000 × 5.5% = $66,000
No marginal stacking, no incremental brackets. Compare to a $959,000 purchase, where standard duty would be $2,870 + 6.0% × $829,000 = $52,610 — a $959k house attracts $52,610 of duty, while a $960,001 house attracts $52,800 (5.5% of $960,001).
If the same $1.2M buyer were a first home buyer, they would receive no concession because the price exceeds the $750,000 cap.
If the buyer were a foreign person:
- Standard duty: $66,000
- Plus foreign surcharge: 8% × $1,200,000 = $96,000
- Total: $162,000 — 13.5% of the purchase price in transfer taxes alone.
Common Mistakes
- Assuming the 5.5% applies marginally. It does not. The whole price is taxed at 5.5% once you cross $960,000.
- Triggering the foreign-purchaser surcharge through trust structures. A discretionary trust with a single foreign-resident beneficiary in the class can be deemed a foreign trust. The SRO's foreign purchaser ruling DA-058 sets out the exclusion criteria.
- Misapplying the FHB phase-in formula. The formula multiplies standard duty by the fraction, not the price. Many online calculators get this wrong on the boundary.
- Confusing PPR concession with FHB concession. Victoria has a separate, smaller PPR concession for non-first-home owner-occupiers up to $550,000 — it stacks differently and is often missed.
- Forgetting off-the-plan concessions changed. From October 2024, Victoria introduced a temporary expanded off-the-plan concession with no price cap for a defined window. Check the SRO site for current eligibility before relying on a calculator's output.