10 Things to be aware of about Land Tax in Victoria

Land tax is an annual tax charged on certain land holdings in Victoria. It is assessed based on the value of land owned as at midnight on 31 December each year.

The value of land is determined by the Valuer General Victoria (VGV), and assessment notices are issued by the State Revenue Office (SRO) around the start of each year (usually between January to June). The Land Tax collected is used by the government to help fund public services in Victoria.

Whether you are a homeowner, a property investor, or considering buying property in Victoria, understanding your land tax obligations is important. Land tax rules can be complex, and common misunderstandings can lead to unexpected bills, penalties, or missed exemptions.

As a Victorian conveyancing firm that assists clients with buying, selling, and transferring property, we regularly receive questions about land tax in Victoria. This guide sets out 10 key things to be aware of about land tax in Victoria, that every property owner should understand.

1. Who pays Land Tax in Victoria

In Victoria, land tax is payable by the owner of land where the total taxable value exceeds the relevant threshold, unless an exemption applies.

The more common exemptions for land tax in Victoria include;

• A home, being the owners principal place of residence (PPR)
• A farm, that is primary production land (PPL)
• A rooming house, that is used primarily for low-cost accommodation by people with low incomes
• A property owned or used for charitable organisations.

There are other less common exemptions for land tax Victoria, which are detailed on the SRO’s website.

2. What Is the Land Tax Threshold and How Is Land Tax Calculated in Victoria

2.1 Threshold

The threshold amount for land tax to apply, is when the taxable value of land holdings as at midnight 31 December is at or above $50,000 for individuals and $25,000 for trusts (at the date of publishing this article).

2.2 How is Land Tax Calculated

The Land Tax rates, including general rates and trust and other surcharge rates, can be viewed here; https://www.sro.vic.gov.au or you can use the SRO’s Land Tax calculator here; https://www.sro.vic.gov.au (noting the calculator does not deal with any joint ownership assessments).

Land tax in Victoria is calculated using a sliding scale, meaning the more taxable land you own, the higher the rate applied.

3. Joint Ownership

If you own land with other people, known as ‘joint ownership’ (whether as individuals, companies, trusts, or a combination of these), the SRO may issue separate land tax assessments.

The SRO can assess land tax for each unique joint ownership where the total taxable value exceeds the relevant threshold, as well as assess each joint owner individually. This means you may receive more than one land tax assessment. In some cases, a joint ownership deduction may apply.

4. What is the Principal Place of Residence Exemption

4.1 Ownership Requirements for PPR Exemption

The PPR exemption does not apply to land owned by companies, owners corporations, or other organisations, and only applies to land held by eligible trustees in limited circumstances.

An individual landowner or eligible trust may be eligible for the exemption, provided they have resided at the residence for at least 6 months from 1 July of the year before the assessment.

If you purchase a residential property that you plan to use as your PPR, your conveyancer will inform the SRO at the time of settlement, by stating this on the Notice of Acquisition. However, if there is a change, for example you originally purchased as an investment property but then move in or are moving homes at a later time, you will need to notify the SRO of the changes and apply for any exemption. It is important that SRO are kept informed of situation changes so that assessments can be updated, as SRO can issue retrospective assessments when they become aware of any change and in some instances penalties and interest may apply.

4.2 Land Requirements for PPR Exemption

The SRO provides that for the exemption to be able to be applied to the land, there must be a building on the land which is designed and constructed primarily for residential purposes and can lawfully be used as a place of residence. For newly built homes, this means the certificate of occupancy must be issued.

From 1 January 2026, there has been a change for certain owner-occupied land to be exempt, if it is valued less than $300,000, and contains a temporary residence, such as a caravan, tent or shed.

Some other points to consider;

• If you have a holiday home, this generally cannot be your PPR for land tax purposes, as its considered a second home.
• If you have more than one title, usually the exemption will only apply to the title that has the residence, unless the residence does straddle the boundaries of the titles.
• If a PPR property is used to carry on substantial business activity on part of the property, you may be liable for land tax assessed on the value of the portion of the property used for business activity.
• If you are building and renovating, and not currently occupying the property but plan to occupy upon completion as your PPR, the exemption can still be applied. You would need to submit the application to SRO (with any extension requests). If the PPR exemption applies, you cannot have another PPR exemption in Australia.

Importantly, the PPR exemption is not always applied automatically, and landowners must notify the SRO if their circumstances change.

5. Investment Properties are usually subject to Land Tax

For investors, land tax should be treated as an ongoing cost of owning property in Victoria. Investment properties are generally not eligible for land tax exemptions, which means most property investors will have annual land tax obligations in Victoria once the taxable land value exceeds the relevant threshold.

If you sell an investment property during the year, you are still liable for the full year’s land tax, as land tax is assessed based on land ownership as at midnight on 31 December of the previous year.

For contracts entered into from 1 January 2024, vendors are generally prohibited from requiring a purchaser to pay or reimburse the vendor’s land tax. There are limited exceptions to this rule, such as where the property value exceeds $10,400,000 or where the purchaser is in default.

If you earn rental income from an investment property, land tax may be claimed as a tax deduction for the year in which the income relates, rather than the year the land tax is paid.

6. Land Tax is Based on Site Value, not Market Value

Land Tax is assessed on the ‘taxable value’ of the land, being the site value determined by the VGV and provided to the SRO on 1 January each year.

The site value is not a market value, it is the value of the land only. The site value is generally listed on the Council Rates Notice. SRO use the site value from the previous year for the assessment for the next year.

For more information on the valuation process, please visit https://www.land.vic.gov.au

The VGV also provides the SRO with a capital improved value, which means the value of the land plus capital improvements (such as dwellings or other structures). The capital improved value is used by the SRO for the assessment of vacant residential land tax and windfall gains tax.

There is a process to object to the site value if you disagree with the valuation. This must be lodged within 2 months of issued date of the assessment notice.

7.Trusts have Special Rules

Land owned by trusts is subject to different land tax rules and often higher rates than land owned by individuals.

Because trusts can provide certain income tax benefits, the SRO applies special land tax rules to different trust structures, which often result in higher land tax rates. There are sets of special rules for land tax for each of the different trust structures.

There are some surcharges to be aware of for trusts;

1. Trust Surcharge

The trust surcharge applies to most discretionary, unit and fixed trusts once the total value of the taxable land held in trust is $25,000 or more. When the total value of the taxable land is $3 million or more, there is no difference between the general and trust surcharge land tax rates.

2. Absentee Beneficiary Trust Surcharge.

The Absentee owner surcharge is an additional land tax assessed at general or trust surcharge rates. This surcharge is 4% currently (as at the date of this article). An absentee trust is a trust that has at least one beneficiary who is an absentee person. The SRO must be notified of an absentee owner before 15 January the following year. There may be penalties on parties failing to notify SRO. To understand more about absentee owners and Absentee owner surcharge, please visit the SRO website; https://www.sro.vic.gov.au

8. Vacant Residential Land Tax

The Vacant Residential Land Tax (VRLT) was introduced with the aim to increase the supply of housing. It is different from land tax, and both may apply in some instances.

VRLT may be payable if you own;

• Residential land with an existing home that was vacant for more than 6 months in the previous calendar year
• Residential land with an existing home that has been under construction or renovation or uninhabitable for 2 years or more
• Land in metropolitan Melbourne that has remained undeveloped for a continuous period of 5 years or more and is capable of residential development.

For more information on Vacant Residential Land Tax, please visit; https://www.sro.vic.gov.au.

9. Keeping the SRO informed of changes

As noted earlier, upon settlement of a property, your conveyancer will provide the SRO with a Notice of Acquisition with the details of the property transaction, also noting the intended use of the property if it is the new owners PPR.

It’s important as a property owner that SRO are notified of any other changes, including changes of where you are living, if you are building or renovating, if you start to lease out your PPR etc. To manage land tax information, landowners can access ‘My Land Tax’ portal with SRO. This will enable them to view assessments, update details, apply for exemptions, and make payments.

Keeping your details up to date with the SRO is one of the simplest ways to avoid penalties and interest.

10. Who to go to for advice

Land tax in Victoria can be complex, particularly where multiple properties, trusts, or changes in use are involved. Understanding your land tax obligations early can help you avoid unexpected assessments, penalties, and unnecessary stress.

While conveyancers do not provide tax advice, a Victorian conveyancer plays an important role in identifying land tax issues during property transactions. This includes reviewing contract disclosures, flagging potential land tax concerns, and ensuring the State Revenue Office is notified correctly at settlement.

For tax planning or advice specific to your circumstances, it is recommended that you speak with your accountant or tax lawyer.

If you are buying, selling, or transferring property in Victoria and would like assistance from a conveyancer with local experience, please contact us to discuss how we can help.

You may also like to check out “Buying a Property” for further information on our services.