Deceased estates and land tax

Key information

When a person who owns land in Victoria passes away, the land owned by them is treated differently for land tax depending on whether it was used as their principal place of residence (PPR).

• If the land was exempt as their principal place of residence (PPR), it will remain exempt for a period.
• If the land was taxable, it remains taxable at general rates of land tax for a period.

Deceased estate administration

A person may die testate (with a valid will) or intestate (without a valid will). In either case, before the estate can be administered, the personal representative for the estate generally must apply to the Supreme Court of Victoria or other relevant authority for a grant of representation.

There are 2 types of grants of representation:

• Where someone dies with a valid will, the personal representative is named in the will and the grant of representation is called a grant of probate.
• Where an individual dies without a valid will, the personal representative can be either the State Trustees or a family member and the grant of representation is called letters of administration.

Once a grant of representation has been made, the estate moves into a period of administration. 

During this time, the personal representative:

• is the legal owner of all the land and property of the estate, and
• is responsible for settling the liabilities and collecting the assets of the deceased for distribution to the beneficiaries of the estate in accordance with the terms of the will or rules of intestacy (set out in Part 1A of the Administration and Probate Act 1958) upon administration of the estate.

Once the administration of the estate is completed, the personal representative becomes a trustee and holds the assets of the estate on trust for the beneficiaries.

The assets of an estate can be:

• distributed directly to (or sold and the proceeds of sale distributed to) the beneficiaries, or
• distributed to the trustee of a trust that is established within the terms of the will where the assets are to be held on trust for a beneficiary or beneficiaries (this is known as a testamentary trust).

Land tax during estate administration 

Under the Land Tax Act 2005 (the Act) a trustee generally pays land tax for land held on trust at land tax surcharge rates. This includes estate land held by a personal representative but not while it is an administration trust. 

An estate held by a personal representative is considered an administration trust from the date of the person’s death until the end of a period, known as the concessionary period, which is the earlier of the:

• third anniversary of the date of death of the deceased, or further period approved by the Commissioner, or 
• date of completion of administration of the deceased estate.

During the concessionary period, an estate will be taxable at general rates of land tax. Land owned and exempt from land tax as the deceased’s principal place of residence (PPR) will be treated differently to other land owned by the estate. 

If administration of the deceased estate is not completed within the concessionary period, the surcharge rate applies to the land.

In exceptional circumstances, and provided that administration has not been completed, the Commissioner has the power to extend the concessionary period beyond the third anniversary of the deceased’s death. To apply, contact us stating your reasons and providing relevant supporting evidence. 

Completion of administration

Administration of an estate is considered complete when any of the following occurs:

• The personal representative has completed all the duties of administering the estate except distribution to the beneficiaries.
• The personal representative has made an interim distribution of any part of the estate to the beneficiaries, indicating that the estate has sufficient funds to discharge all debts and cover all expenses.
• The personal representative first assents to the transfer of an estate land to the beneficiary or person entitled under the will, such as a trustee.
• The personal representative has completed the final accounts of the estate.
• The personal representative has commenced holding any estate land on trust or the beneficiaries allow land to be held by the LPR on trust on a continuing basis for their enjoyment (e.g. when a beneficiary is granted a right to reside at the land under the will and takes possession of the land). 
• An estate land is transferred to the person entitled to it under the will or testamentary instrument or to the individuals listed in the Administration and Probate Act 1958.

This means the administration of an estate can be considered completed for land tax purposes before the assets are distributed to the beneficiaries. Once the administration of the estate is completed an extension of the concessionary period is not possible.

If you are uncertain if administration of the deceased estate has been completed, you should seek legal advice.

Land tax following completion of administration

Once administration is complete, the new legal owner of the land is liable for any land tax. This includes where land is:

• transferred to the beneficiary, or
• transferred to a trustee of a testamentary trust, or
• sold and transferred to a third party.

If the personal representative completes administration but retains legal ownership of the land, they no longer own the land in the capacity of personal representative. They hold the land as trustee for the beneficiaries and pay land tax at land tax surcharge rates. 

In some cases, the trustee may be assessed at general rates by notifying us of the beneficiaries of the trust or nominating a PPR beneficiary.

If the trustee is also the sole beneficiary, they own the land in their own right because a person cannot hold land on trust for themselves. This means that land will be assessed at general rates.

Land tax and the deceased's PPR

If the deceased owned and occupied land as a PPR at the time of their death, a PPR exemption may apply for the PPR concessionary period which is from the date of the person’s death until the earlier of the:

• third anniversary of the person’s death, or
• day on which the deceased’s interest in the land vests in the beneficiary of the estate or the trustee of the testamentary trust.

This exemption does not apply if the deceased had:

• a right to reside or life interest in the land, or 
• was a person with a qualifying disability and the land was owned by an immediate family member.

Prior to the 2026 land tax year, this exemption did not apply if any income was derived from the land in the year preceding the tax year. 

From 1 January 2026, this exemption does not apply if any income is derived from the land other than income derived from a part of the land that was used to carry on a substantial business activity or from a separate residence.

In exceptional circumstances, and provided administration is not complete, we can extend the PPR concessionary period beyond the third anniversary of the deceased’s death. To apply, contact us stating your reasons and providing relevant supporting evidence. 

If administration is not completed by the end of the PPR concessionary period, the PPR exemption ceases and the land becomes taxable.

Obligations of personal representatives/trustees

Personal representatives must notify us when the administration of a deceased estate starts and ends to help us get your land tax right. Failure to notify may render the personal representative liable for penalty tax.

Commencement of administration

For land tax purposes, the personal representative is appointed on the issuing of the:

• grant of probate, or
• letters of administration.

Within one month of the appointment, the personal representative must lodge a commencement notice of their appointment (the commencement of administration) with us, and provide the listed supporting documents. 

Completion of administration

A personal representative must also lodge a completion notice with us within one month of the completion of the administration of a deceased estate.

Obligations under trust notification provisions

In addition to the requirements outlined above, the trustee of a trust, which may include a personal representative, established on or after 1 January 2010 is required to comply with the trust notification provisions under the general land tax trust regime rules.