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Understanding property taxes
Land tax
You may need to pay land tax if you own an investment property, holiday home, commercial property or vacant land.
Land tax is an annual tax based on the total taxable value of all the land you own in Victoria on 31 December, excluding exempt land such as your home (principal place of residence).
Land tax assessments are generally issued between January and June each year.
Vacant residential land tax
From 1 January 2025, vacant residential land tax (VRLT) will apply to residential land left vacant for more than 6 months in a calendar year across all of Victoria. VRLT is assessed on the previous calendar year’s occupation. For example, VRLT in 2025 is based on a property’s vacancy in 2024.
An escalating rate of tax applies, based on the number of consecutive years the land has been liable for VRLT (1% of capital improved value for the first year, 2% for the second year, 3% for the third year onwards).
You must notify us by 15 January if you own residential land that is vacant for more than 6 months in the preceding calendar year.
Short stay levy
From 1 January 2025, the short stay levy will apply to short stays in Victorian properties.
You may have to pay the short stay levy if you accept a booking for a stay in Victorian accommodation that is shorter than 28 consecutive days, and charge a fee for the stay. A booking for 28 days or more does not constitute a short stay and is not subject to the levy.
The levy will be a flat 7.5% of total booking fees paid, including fees and charges such as cleaning fees and GST.
Commercial and industrial property tax
Certain commercial and industrial property transactions are moving from the land transfer (stamp) duty and landholder duty regimes to an annual property tax known as the commercial and industrial property tax (CIPT) reform.
From 1 July 2024, commercial and industrial properties will transition to the new CIPT reform scheme if there is an eligible dutiable transaction or relevant acquisition.
Duty still applies to entry transactions. Ten years after the initial entry transaction, CIPT will begin to apply to the land at a flat rate of 1% of the land’s site value each year.
For example, if you bought a commercial or industrial property on 26 August 2024 and it transitioned to the new CIPT reform scheme, duty would be payable on the initial purchase and CIPT of 1% of the site value will be payable from 2035 onward, provided the land continues to have a qualifying use.
Windfall gains tax
When the value of land increases due to government rezoning, some landowners will pay a tax on these windfall gains.
Windfall gains tax applies to all land where a rezoning results in a value uplift of more than $100,000.
For land rezoning that results in a taxable value uplift:
- more than $100,000 but less than $500,000 — the tax will apply at a marginal rate of 62.5% on the uplift above $100,000
- $500,000 or more — a tax rate of 50% will apply to the total uplift.
The owner of the land subject to the rezoning pays the windfall gains tax.
Landowners can opt to defer payment of all or some of their windfall gains tax liability until the next dutiable transaction (or relevant acquisition) occurs, or 30 years after the rezoning event — whichever occurs first. Additional costs will apply where a liability is deferred.
Calculators
There are calculators available to help you understand taxes and duties payable when you:
- buy a property
- own a property.
