What is the commercial and industrial property tax?
Description
Commercial and industrial property in Victoria is moving from land transfer duty, otherwise known as stamp duty, and landholder duty to an annual tax – the commercial and industrial property tax.
Transcript
Commercial and industrial property in Victoria is moving from land transfer duty, otherwise known as stamp duty, and landholder duty to an annual tax – the commercial and industrial property tax.
From 1 July 2024, commercial and industrial properties will transition to the new tax reform scheme if there is an eligible dutiable transaction or relevant acquisition defined in the Act as an ‘entry transaction’.
Duty will still apply to entry transactions, but concessions can also apply to this duty payment such as the 50% concession for purchases of regional commercial and industrial land.
Additionally, as part of the transition, certain eligible purchasers will have the option of accessing a government transition loan for the duty payment due on the entry transaction.
Generally speaking, any subsequent transactions involving land that previously entered the reform will then be exempt from duty if the property continues to be used for commercial and industrial purposes.
There are some exceptions for complex transactions and for transactions concerning interests of land of less than 100%.
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 buy a commercial or industrial property on 1 October 2024 and it transitions to the new system, the commercial and industrial property tax of 1% of the site value will be payable from 2035 onward.
This is provided that the land continues to have a qualifying use.
The tax will only apply to commercial and industrial properties with a contract and settlement date on or after 1 July 2024. It will not apply to commercial or industrial property transacted before 1 July 2024.
For more information about the change and what it means for you, visit our website: sro.vic.gov.au/cipt
