Who pays land tax in Victoria?
In Victoria the responsibility for paying land tax rests with the landowner. This tax is assessed by the State Revenue Office annually based on the total value of all taxable land as of the last day of the preceding calendar year, December 31.
Land tax is applicable to various forms of land, including vacant land and investment properties. However, exemptions exist for primary residences, farms, and other specified uses, such as rooming houses and charitable institutions, ensuring they do not attract land tax.
How is land tax calculated in Victoria?
In Victoria, land tax is calculated based on the total taxable value of all the land that a person owns as of December 31st of each year. The taxable value is determined by the State Revenue Office, which uses the unimproved value of the land as determined by the Valuer-General.
For the 2024 financial year, land tax rates in Victoria start with a $500 charge for land with a taxable value between $50,000 and $100,000, progressing to rates that combine flat fees and percentages for higher values, ultimately reaching $31,650 plus an annual levy of 2.65% for land with a taxable value over $3,000,000.
Trust surcharge rates and absentee owner surcharge rates have also been revised. Starting from 2024, the absentee owner surcharge rate has doubled from 2% to 4%, and the minimum property value threshold for non-trust absentee owners has been lowered from $300,000 to $50,000. You can read more about these adjustments with a detailed guide at the State Revenue Office website.
In addition to existing exemptions for principal residences, farming, business land, and properties owned by charitable or government bodies, the 2024 financial year introduces several notable updates.
Now, homes under construction or renovation that face delays due to a builder’s liquidation may qualify for an extended exemption period of up to two years. Furthermore, land protected under a conservation agreement with the Trust for Nature and properties used by immediate family members eligible for a special disability trust—even if such a trust hasn’t been established—are also exempt from land tax.
Additionally, progressive land tax surcharges apply to foreign owners of residential property in Victoria.
What is the COVID-19 Debt Temporary Land Tax Surcharge?
In addition to existing land tax, a temporary surcharge has been introduced for the 2024 financial year to assist in managing COVID-19 debt. This surcharge applies to taxable landholdings, with the specifics of the rates depending on the overall value and ownership structure of the holdings.
Can property owners seek an exemption from land tax?
Yes, property owners in Victoria may be eligible to seek an exemption from land tax if they meet certain criteria. Some examples of exemptions that may be available include:
- Primary residence: The primary residence or principal place of residence of the landowner is generally exempt from land tax.
- Charitable organisations: Land that is owned and used by charitable organisations for charitable purposes may be exempt from land tax.
- Government bodies: Land that is owned and used by government bodies for public purposes may be exempt from land tax.
- Special disability trusts: Land that is owned by a special disability trust for the benefit of a person with a disability may be exempt from land tax.
- Business or farming: Land that is used primarily for business or farming purposes may be eligible for a concession on the land tax.
- Other exemptions may include land used for primary production, land used for certain types of mining, and land that is used as an affordable housing project.
It’s important to note that these exemptions and concessions are subject to change over time and may also have certain conditions that need to be met in order to qualify. Additionally, Property owners can apply for a land tax reduction or concession if they meet certain criteria.
Is land tax in Victoria adjusted at settlement of a property purchase?
In Victoria, the process of adjusting land tax during the settlement of property sales has traditionally been based on a proportional division of responsibility between the seller and the purchaser. This means that at the time of settlement, the land tax due for the property for the financial year is divided. The seller is accountable for the land tax up to the date of settlement, calculated on a single holding basis.
Conversely, the purchaser assumes responsibility for any land tax due after the settlement date, also on a single holding basis. This adjustment is a routine part of the settlement adjustments, with the tax amount due being prorated based on the portion of the year for which each party owns the property.
For instance, if a property transaction is completed on July 1, the buyer is responsible for the land tax for the second half of the financial year, which runs from January 1 to December 31, meaning the buyer and seller each bear half of the annual land tax bill.
However, a policy change effective from January 1, 2024, introduces a significant modification to this practice. Under the new regulations, the apportionment of land tax costs between sellers and buyers in property sales is forbidden for property transactions valued under $10 million. This change is designed to prevent sellers from passing their land tax or assessed windfall gains tax liabilities onto buyers through the contract of sale.
As a result, it will become illegal for sellers to require buyers to contribute to any part of the vendor’s land tax or confirmed windfall gains tax through the sale contract. This updates the previous method of handling land tax adjustments, aiming to ensure a fairer distribution of tax responsibilities between parties in property transactions.
However, it’s important to note that these new rules do not affect contracts of sale made before January 1, 2024, nor do they impact options for such contracts granted before this date in relation to windfall gains tax.
It’s essential to understand that regardless of these changes, the procedure for making the land tax adjustment typically involves the conveyancers or solicitors of the involved parties rather than the State Revenue Office directly. This professional involvement ensures accurate calculation and equitable distribution of tax responsibilities as per the current regulations.
Who is land tax paid to in Victoria?
In Victoria, land tax is paid to the State Revenue Office (SRO), which is a division of the Victoria Department of Treasury and Finance. The SRO is responsible for assessing and collecting land tax from property owners in Victoria. Once the land tax is calculated, SRO sends the land tax notice to the property owner, who then has to pay the land tax by the due date mentioned in the notice.
The land tax can be paid in various ways, such as:
- Online through the SRO’s website
- By mail, by sending a cheque or money order to the SRO
- By phone or in person, by credit card or debit card, at an Australia Post office or at the SRO’s office.
It’s important to note that land tax applies even to investment property and failure to pay land tax by the due date may result in additional charges and penalties, and in some cases, the SRO may take legal action to recover the unpaid taxes.
Disagree with your land tax assessment?
Should you find yourself in disagreement with your land tax assessment, there are established procedures to lodge an objection. Specifically, if the valuation of your property appears incorrect, you can file an objection online. This action must be taken within two months of receiving the assessment.
It’s important to note that even if you decide to object to your land tax assessment, the full amount of the tax must still be paid by the due date. If your objection is successful, a land tax adjustment will be processed, and you will receive a refund for any overpayment.
For other concerns or discrepancies, such as those related to your primary residential status, ownership of other land, or updates to your contact information, the “My Land Tax” portal offers a convenient solution. Through this platform, most objections can be addressed, and necessary amendments can be made efficiently, ensuring that your land tax records are accurate and up-to-date.
How we can help
Need assistance with land tax in Victoria? Contact our team at (03) 8590 8370 to obtain legal advice from our expert property lawyers and conveyancers. We can assist you with your property matters.
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 of matters of interest, and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.
