Updated on 19 January 2026
What is Land Tax?
Land tax is a state government imposed tax on investment properties. It’s very similar to stamp duty and is a major source of revenue for the government.
When a property changes hands in Victoria, land tax isn’t just something the vendor deals with – it can also affect the purchaser at settlement. This article explains how land tax adjustments work, what the single-holding rule means, and how recent changes may impact your next transaction.
Understanding Land Tax at Settlement
Land tax is a state-imposed charge on investment and non-exempt properties. It’s similar to stamp duty in that it funds public revenue, but unlike stamp duty, it’s an annual tax based on land value.
Key points:
- Applies when your total taxable land value exceeds $250,000 (excluding your main residence).
- Your Principal Place of Residence (PPR) is exempt.
- Calculated on the unimproved value of land only.
- Assessed on the aggregate value of all investment land you own.
- Rates increase on a sliding scale — the higher the land value, the higher the tax.
The State Revenue Office (SRO) issues yearly assessments based on valuations provided by the Valuer-General.
What are settlement adjustments?
When a property settles, all regular outgoings (like council rates, water, and land tax) are shared between vendor and purchaser so that each pays for the period they actually own the property.
Under General Condition 15 of Victoria’s Contract of Sale, the seller covers outgoings up to and including settlement day, while the buyer takes over after.
15.2(b) The land is treated as the only land of which the vendor is owner (as defined in the Land Tax Act 2005).
This condition prevents buyers from being charged more land tax than what’s attributable to the property they’re buying.
How Land Tax adjustments are calculated
Unlike council or water rates, land tax is ad valorem – calculated on the property’s value.
Because the SRO bases the rate on the total land value of all properties a vendor owns, a seller with several investments is taxed at a higher bracket.
To keep things fair, contracts use the single-holding formula, meaning for adjustment purposes, the property being sold is treated as if it were the only land the vendor owns.
The single-holding figure appears on the second page of the Land Tax Certificate, and this is the value used to determine how much land tax the purchaser contributes at settlement.
Example
Suppose a vendor owns multiple investment properties worth $2 million in total. Their full land-tax bill might be $19 000, but under the single-holding calculation, the sold property contributes only $3 000. The buyer pays just that $3 000 portion — not a share of the entire portfolio’s tax.
This method ensures purchasers aren’t unfairly charged at the vendor’s higher aggregated rate.
2024 rule changes
Since 1 January 2024, vendors can no longer pass their land-tax costs to purchasers for properties under $10 million.
Introduced by the Sale of Land Amendment Act 2023, the rule prevents sellers from including clauses that shift land-tax or windfall-gains liabilities to buyers.
Contracts signed before 1 January 2024 remain unaffected.
Why Land Tax adjustments matter
A correct adjustment keeps settlements transparent and dispute-free. Errors can cost buyers or sellers thousands – which is why professional conveyancers handle these calculations to ensure compliance with the SRO and contract terms.
Need a refresher on Victorian Land Tax?
If you’d like to understand how land tax is calculated, who pays it, and which exemptions apply, read our full Land Tax in Victoria Guide for a complete breakdown.
Speak to Haitch Conveyancing
Unsure how Land Tax adjustments apply to your next property sale or purchase?
At Haitch Conveyancing Melbourne, our property lawyers and conveyancers can:
- Review your Contract of Sale for land-tax clauses
- Calculate single-holding adjustments accurately
- Ensure compliance with current Victorian settlement laws
- Advise on land-tax exemptions and surcharges
📞 Call us on (03) 8590 8370 for tailored advice about your property settlement.
General information only — not legal advice. Always seek professional guidance before acting on this content.
