If you own property, you may have to pay land tax. However if you live in your own home, it is generally exempt
What you should know about land tax
If you own property in Victoria, here are a few important points to know about land tax.
1. Your home is exempt
And so is primary production land, and land used by charities. Exempt land does not include any investment property or holiday homes you may own, even if they are vacant. If you rent out your primary home, or change your address, the exemption ends and you must notify us immediately.
2. The threshold is $250,000
You pay land tax when the total value of all the Victorian property you own as at 31 December, minus exempt land such as your home, is equal to or exceeds the threshold of $250,000 each calendar year (for trustees, it's $25,000). This means the value of all the taxable property you own at midnight on 31 December this year will determine if we need to assess you for land tax and send you a bill by May of next year.
3. It's an annual tax calculated on site value
Land tax is calculated using the appropriate rate and applying this to the total taxable value of your land holdings (excluding exempt land such as your home). The total taxable value of your land holdings is based on the site value determined by your council or the Valuer-General every two years. Find your site value on your council rates notice.
4. Paying is easy
Do you have to pay land tax?
If you own property in Victoria, paying land tax depends on what land you own, what it is used for, and its total value. In 2016, you will pay if you own taxable land valued at $250,000 or more.
From 1 January 2016, a 0.5 per cent absentee owner surcharge on land tax applies to Victorian land owned by an absentee owner. In its 2016-17 Budget, the Victorian Government has announced an increase in the surcharge from 0.5 per cent to 1.5 per cent from 1 January 2017.
When buying or selling, a land tax clearance certificate will tell you if land tax is owed on the property.
What land is taxed?
You may have to pay land tax if you own, by yourself or with others, any of the following in Victoria:
- Rental / investment properties,
- Commercial properties such as retail shops, office premises and factories,
- Holiday homes,
- Vacant land,
- Any other non-exempt land
What land is exempt?
Land tax does not apply to exempt land. The most common exemptions are for:
- Your home, known as your principal place of residence (PPR),
- Your farm, known as primary production land (PPL),
- All land/s you own if the total site value is under the threshold of $250,000, and
- Rooming houses and charitable institutions
Who is the owner of land?
Individuals and companies own land solely, jointly or as a trustee. You are an owner if you:
- Hold the freehold title to land,
- Hold a lease of Crown land,
- Hold a licence of Crown land with an absolute or conditional right to acquire the land,
- Are a life tenant,
- Manage a title-based, time-sharing scheme, or
- Are a beneficiary or unitholder of certain trusts
Sometimes, when land is sold, both the existing owner and the incoming owner of the land are considered the owner for land tax purposes.
The personal representative of a deceased estate also has several land tax obligations during the administration period.
When are land tax assessments issued?
Generally we send land tax assessments to you or your authorised representative between late January and late May each year. You may, however, receive an assessment (including assessments for previous land tax years), outside this timeframe.
We are committed to ensuring that all taxpayers pay the correct amount of land tax.
For example, if we discover a PPR exemption has been incorrectly applied to your land, we may issue reassessments to recover the land tax you should have paid for the current year and also for the previous four years. Further, you may also be charged penalty tax.
Have you received two or more assessments?
You may receive more than one assessment. However, you should receive only one individual assessment. This should list all the Victorian land you own individually plus any land you own jointly with others.
If you receive more than one individual assessment, you must call us on 13 21 61 so that we can correctly record the land/s you own.
You may also receive a separate joint assessment if you own land jointly with others. You will receive this on behalf of the other owners.
If you own land as the trustee of a trust, you may receive a separate trust assessment.
Note: there is no need to call us unless you receive more than one individual assessment.
Owning land with others
If you own land with others, in whatever ownership structure, you are a joint owner of land.
You may own land with different people. Each unique combination of owners is considered a different joint ownership. Joint owners are assessed for land tax in a different way.
You've received an assessment – what do you do now?
Your land tax assessment should list all Victorian land you own, including exempt land and your interest in any jointly owned land. Your PPR, if you have one, will be clearly highlighted as such.
Please check your assessment to confirm all the details are correct, ensuring:
- All land you own is listed
- You have not received an exemption for land for which you are not eligible,
- Land that you have sold is not included,
- Land that is eligible for exemption has been marked as exempt (including your PPR)
You can then:
- Contact us and request an amendment to your details if they are incorrect (you must do this within 60 days), or
- Pay the assessment
If your assessment is incorrect because of items (1) or (2), penalty tax may apply if you do not lodge your amendment request within 60 days.
Land held on trust
Land held on trust is treated differently from land held by a person in their own right.
In 2016, if you own land as trustee of a trust for the benefit of a beneficiary, you will have to pay land tax if the aggregate of the taxable Victorian land holdings of the trust are valued at $25,000 or more.
Further, a surcharge rate on the general land tax applies for the aggregate Victorian land holdings of the trust from $25,000 through to less than $3 million. The surcharge ceases to apply for taxable land holdings valued at $3 million or more.
The trust surcharge rule is subject to various exclusions and exceptions. It does not apply to certain trusts, such as an administration trust. Trustees may also avoid the surcharge rate by notifying us of the beneficial interests in land or unitholders of the trust.
From 1 January 2016, a 0.5 per cent absentee owner surcharge on land tax applies to Victorian land owned by an absentee owner, which includes trustees of absentee trusts.
Corporations are related corporations in certain circumstances. Where two or more corporations are related, the Commissioner may treat them as a group for land tax purposes.
The taxable value of all Victorian lands owned by a group is aggregated to calculate the land tax payable on those lands. Members of a group are jointly and severally liable for the land tax payable by the group.
From 1 January 2016, a 0.5 per cent absentee owner surcharge on land tax applies to Victorian land owned by an absentee owner. An absentee owner can be a member of a land tax group.
Please note that land held by a trustee of a trust is not grouped for land tax purposes however you are required to notify us that the land is held on trust.
Special land tax
Special land tax is a one-off tax charged in certain circumstances where land is no longer exempt. It is charged at a rate of five cents for each dollar of the taxable value of the land at the date the land ceased to be exempt. If you are an absentee owner, the rate is 5.5 cents for each dollar of the taxable value of the land.
When you don't agree with our assessment
If you think you have been assessed incorrectly and wish to formally dispute your land tax assessment, you can lodge an objection.
Even if you have lodged an objection you must still pay in full by the due date, or you will also be charged with interest. If your objection is successful, any amount overpaid may be refunded with interest.
Land tax clearance certificates
We issue certificates on whether land tax is payable on a property. You can only request a certificate or update if you are the vendor, purchaser or mortgagee of the property.
Getting it right
Our priority is to help you pay the right amount of tax at the right time. Learn more about how we'll do this.