TCV Transition Loan
The Government Transition Loan — Funding the Final Stamp Duty
To ease the transition, the Victorian Government offers a facilitated loan through the Treasury Corporation of Victoria (TCV) to fund the final stamp duty payment on an entry transaction.
At a Glance
- The TCV Transition Loan is available to eligible purchasers to fund the stamp duty payable on an entry transaction.
- Maximum loan amount: $1,930,000 per property.
- Interest only during the 10-year transition period; principal repaid at end of term or on sale.
- The loan is secured by a statutory charge over the property, registered on the title.
- SMSF trustees are ineligible — the statutory charge likely contravenes SISR Regulation 13.14.
- Application is made to the SRO after settlement of the entry transaction.
Critical Warning — SMSF Trustees
SMSF trustees are ineligible for the TCV Transition Loan. The statutory charge that secures the loan is registered on the title of the property. SISR Regulation 13.14 prohibits a trustee of a regulated superannuation fund from granting a charge over, or in relation to, an asset of the fund.
Accordingly, an SMSF trustee that applies for and receives a TCV Transition Loan — or permits a statutory charge to be registered over an SMSF asset — risks:
- Contravening SISR Regulation 13.14 (civil penalty provision)
- Potential disqualification of the SMSF as a complying fund
- Adverse tax consequences for fund members
- ATO enforcement action
SMSF trustees acquiring commercial property must fund the stamp duty from the fund's own resources or other compliant financing. Specialist SMSF legal and financial advice is essential.
Loan Terms and Conditions
Eligibility
Eligible Borrowers
- Natural persons (individuals)
- Companies (including proprietary and public companies)
- Trustees of discretionary trusts
- Trustees of unit trusts (other than wholesale unit trusts)
- Partnerships
- Incorporated associations
Ineligible Borrowers
- SMSF trustees (see critical warning below)
- Wholesale unit trust trustees
- Government bodies
- Entities that are not the registered proprietor of the property
How the Loan Works
Entry Transaction Settles
The purchaser completes an entry transaction and pays stamp duty at settlement in the usual way. The stamp duty is funded from the purchaser's own resources at this point.
Apply to SRO
After settlement, the eligible purchaser applies to the SRO for the TCV Transition Loan. The application must be made within a specified period after the entry transaction.
Loan Approved and Drawn Down
TCV approves the loan and advances funds to the borrower (up to $1,930,000). The borrower uses these funds to reimburse the stamp duty payment made at settlement.
Statutory Charge Registered
A statutory charge is registered on the title of the property as security for the loan. This charge is noted on the certificate of title and must be disclosed in any subsequent section 32 vendor's statement.
Interest-Only Repayments
During the 10-year transition period, the borrower makes interest-only repayments to TCV at the fixed rate set at drawdown. No principal repayments are required during this period.
Loan Repaid at End of Term or on Sale
At the end of the 10-year transition period (or on earlier sale of the property), the principal is repaid in full. On sale, the statutory charge is discharged from the proceeds of sale.
Conveyancing Implications
Section 32 Vendor's Statement Disclosure
Where a TCV Transition Loan is secured over a property, the statutory charge must be disclosed in the vendor's section 32 statement on any subsequent sale. The vendor must disclose the existence of the charge, the amount outstanding, and the terms of the loan. Failure to disclose may give the purchaser a right to rescind the contract.
Discharge on Sale
On sale of the property, the TCV Transition Loan must be repaid in full and the statutory charge discharged. The discharge must be arranged prior to or at settlement. Purchasers should ensure that the vendor's solicitor has obtained a payout figure from TCV and that the discharge is registered on title at settlement.
Worked Example
Property Details
- Purchase price: $3,500,000
- AVPCC: 220 (Commercial — Retail)
- Entry transaction: 15 August 2024
- Stamp duty payable: ~$192,500
Loan Outcome
- Loan amount: $192,500 (within $1.93M cap)
- Interest rate: Fixed at drawdown
- Repayment: Interest only for 10 years
- Principal due: 15 August 2034
- CIPT commences: 15 August 2034 (1% of site value)