Owning your own home is every Australian’s dream. Unfortunately, as you probably already know, it’s a very expensive dream.
Luckily, the Victorian Government offers a number of land tax exemptions for homeowners, including the principal place of residence exemption. Your principal place of residence (PPOR) — generally, the home you use and occupy as your main residence — may be exempt from land tax. But what about Victorians who own more than one property, are moving between homes, or have a more complicated land situation?
We get many questions from our clients about what this exemption means for their land tax, whether two properties can qualify for an exemption at the same time, and what happens when moving from one principal place of residence to another.
Below, we’ve answered some of the most common questions and provided a beginner’s guide to the PPR exemption and the circumstances in which a dual PPR exemption may apply.
A bit about land tax
Land tax is an annual tax based on the total taxable value of Victorian land you own, excluding land that is exempt, such as your principal place of residence in most circumstances. Your land holdings are assessed as at 31 December for the following land tax year.
For the 2026 land tax year, the general land tax threshold is $50,000. Different thresholds and surcharge rates can apply to land held on trust. Taxable land can include investment properties, holiday homes, vacant land and certain rural properties that do not qualify for an exemption.
If your residential property is the only land you own and it qualifies for the PPR exemption, you generally won’t have land tax to pay on it. Different rules can apply where part of the property is used to generate income or for substantial business activities.
Land tax can be complicated, particularly where multiple properties, joint ownership or exemptions are involved, so it is always best to seek professional advice if you are unsure.
For a broader overview of how land tax works, including who pays it, how it’s calculated and common exemptions, see our guide to land tax in Victoria.
How is land tax calculated for joint ownership?
If you own land with another party — a spouse or partner, for example — the process for calculating land tax is a little different.
Joint owners are generally assessed using a two-stage process:
First, each unique joint ownership is assessed on the taxable land owned by that group. A joint ownership assessment is generally issued where the total taxable value of the jointly owned, non-exempt land meets the applicable threshold.
Each joint owner may then be assessed individually on all taxable Victorian land they own, including their share of jointly owned land and any land they own separately.
Where jointly owned land is included in both assessments, a joint ownership deduction may apply to the individual assessment to avoid effectively taxing the same interest twice.
If jointly owned land is used by one or more of the owners as their principal place of residence and qualifies for the PPR exemption, that land is generally exempt from the joint ownership assessment.
Can I claim a principal place of residence exemption?
Typically, when you buy a property, you’ll submit a Notice of Acquisition of an Interest in Land form to Land Use Victoria. Information provided when you purchase the property can be used by the State Revenue Office to identify it as your principal place of residence.
If your conveyancer did not nominate your PPR details when you purchased the property, or if you move into another property you already own, you may need to apply for the exemption separately.
A PPR exemption may also be available in certain other circumstances, including where a person:
has been granted a life estate
has been granted the right to live at the property by a will or similar legal document
is a vested beneficiary under an eligible trust and lives at the property
is an eligible trustee where the relevant requirements are satisfied.
Eligibility depends on the particular ownership and occupancy arrangements. The PPR exemption does not generally apply to land owned by companies and certain other organisations, while specific rules apply to land held through trusts.
What requirements must be met for a principal place of residence exemption?
To qualify for the PPR exemption, the property generally needs to be genuinely used and occupied as your principal home.
There must also generally be a building on the land that is designed and constructed primarily for residential purposes and can lawfully be used as a residence. For newly built homes, this generally means a certificate of occupancy must have been issued.
Generally, only one property can receive your PPR exemption at a time. However, there are limited exceptions, including when moving from one principal residence to another.
Different rules can also apply when you have recently purchased a property, are constructing or renovating a residence, or are temporarily absent from your PPR.
Partial exemption
In some circumstances, only part of a property may qualify for the PPR exemption.
For example:
If part of your PPR is used for a substantial business activity, that part may be subject to land tax while the residential portion remains exempt.
If your PPR contains a separate residence on the same title — such as a granny flat or bungalow — that is rented to earn income, land tax may apply to that part of the property while the remainder retains the PPR exemption.
Small or nominal contributions from family members towards expenses such as utilities, maintenance or repairs do not necessarily constitute rental income.
The amount of land that remains exempt will depend on how the property is used and the particular circumstances.
Special circumstances
If you can no longer live in your principal place of residence due to circumstances outside of your control, you may still qualify for a PPR exemption in certain situations.
This can include cases where:
the owner is hospitalised
the owner moves to a residential care facility
the owner lives with a carer who looks after their daily needs
the home becomes unfit to live in because of a natural disaster, accident or malicious damage.
From the 2026 land tax year, some of these rules have been expanded. For example, where a qualifying person moves into care and part of their property is used for a substantial business activity or contains a separate income-producing residence, the residential portion may still qualify for a partial PPR exemption while the income-producing portion remains taxable.
The exemption period for a PPR that becomes unfit to live in has also been extended. From 1 January 2026, the exemption can generally continue for up to four years, with a potential additional two years where the delay in returning to the property is beyond the owner’s or eligible trustee’s control.
Special rules can also apply if you are temporarily absent from your PPR, including where you are living or working interstate or overseas. Eligibility depends on your circumstances, including your previous occupation of the property, whether another property receives a PPR exemption and whether income is earned from the property during your absence.
What’s the difference between a principal place of residence exemption and a main residence exemption?
Though similar, the PPR exemption for Victorian land tax is different from the main residence exemption that applies to capital gains tax (CGT).
Land tax is administered by the Victorian State Revenue Office, while CGT is administered federally by the Australian Taxation Office. The eligibility requirements are different, so qualifying for one exemption does not necessarily mean you will qualify for the other.
Some of the factors that may be relevant when determining whether a property is your main residence for CGT purposes include:
whether you and your family live at the property
where you keep your personal belongings
whether the property is your mailing address and the address you use on the electoral roll
whether services such as gas and electricity are connected to the property.
Can more than one property have an exemption from land tax?
In certain circumstances, you may be able to claim a dual principal place of residence exemption. These rules are primarily designed to accommodate situations where you are transitioning from one principal residence to another.
Otherwise, generally only one property can receive your PPR exemption at a time.
Where the conditions for a transitional dual PPR exemption are satisfied, both properties can generally be exempt for one land tax year only.
Purchasing a new principal place of residence
A dual PPR exemption may be available when you purchase a new property that you intend to use as your principal residence but, as at 31 December, you are still living in your existing PPR.
If the relevant requirements are satisfied, both the existing PPR and the newly purchased property can be exempt for the applicable land tax year.
However, there are conditions. You generally cannot earn income from the new property while it is not occupied as your PPR. You must also move into the new property within 12 months of purchasing it and use and occupy it as your PPR for at least six continuous months.
If these conditions are not satisfied, the exemption on the new property may be cancelled.
Selling your old principal place of residence
A dual PPR exemption may also apply where you have already moved into your new principal residence but still own your previous PPR as at 31 December.
If the relevant conditions are met, both the old and new PPR can be exempt for that land tax year even though you no longer live in the old property.
Generally, you cannot earn income from the old property while it is no longer your PPR, and the old property must be sold by the end of the assessment year. If it is not sold within the required period, the exemption may be cancelled.
What if your principal residence extends across multiple property titles?
There are also circumstances where more than one parcel of land can form part of the same principal place of residence.
If your home is built across the boundary of two parcels of land that you own, the PPR exemption may apply to both parcels.
Similarly, if you live in an apartment and a car park or storage area is held under a separate property title, those titles may collectively form part of the same PPR where the relevant requirements are met.
This is different from the transitional dual PPR exemption described above because the multiple parcels collectively form part of one principal residence, rather than two separate homes receiving an exemption while you transition between them.
Adjoining properties
Land adjoining your principal place of residence may also qualify for an exemption in certain circumstances.
Generally, the adjoining land must:
adjoin your PPR land or be separated from it only by a road, railway or similar boundary that can reasonably be crossed
not contain a separate residence
enhance the PPR land
be used solely for the private benefit and enjoyment of the owner or eligible beneficiary.
For example, adjoining land may contain a swimming pool, garage, shed, tennis court or garden, provided it does not contain a separate residence.
There are important geographical restrictions. In regional Victoria, qualifying adjoining land on a separate title may be eligible for the exemption. In metropolitan Melbourne, the separate-title exemption is generally limited to a separately titled car park and/or storage space associated with an apartment or unit used as the PPR.
Need more information on the dual PPR land tax exemption? Our expert property lawyers will be happy to assist.
This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.
