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 about land tax.
1. Your 2017 and 2018 bills are based on the 2016 council site valuation
Land tax is calculated using the appropriate rate and applying this to the total taxable value (site value) of your land holdings (excluding exempt land such as your home). Because 2016 was a council valuation year, your site value probably increased in 2017, which affects the total taxable value of your land holdings. Your 2018 land tax assessment is also based on the 2016 council site valuation.
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 will determine if we need to assess you for land tax and send you a bill by May of the next year.
3. Your home is exempt
Your home is exempt, as is primary production land, and land used by charities. Exempt land does not include any investment property or holiday homes you own. If you rent out your primary home, or change your address, the exemption ends and you must notify us immediately.
4. Pay by BPAY View
We send assessments annually, and you can pay quarterly or in a lump sum. The easiest way to pay is to register for BPAY View and receive your assessment online. You can also pay by credit card or at any bank (a fee may apply at banks other than Westpac).
5. Vacant residential land tax
From 1 January 2018, homes in inner and middle Melbourne that were unoccupied for more than six months in the preceding calendar year are subject to the vacant residential land tax. The Victorian Government introduced this tax to help address the lack of housing supply in Victoria.
Do I 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 2018, you will pay if you own taxable land valued at $250,000 or more.
Note: When buying or selling, a land tax clearance certificate will tell you if land tax is owed on the property.
From 1 January 2017, a 1.5 per cent absentee owner surcharge (previously 0.5 per cent) on land tax applies to Victorian land owned by an absentee owner. The absentee owner surcharge is an additional amount payable over the general and trust surcharge rates of land tax.
Vacant residential land
From 1 January 2018, a vacant residential land tax (1 per cent of the capital improved value of residential property) is payable if a property in the inner or middle ring of Melbourne is left vacant for more than six months in a calendar year. Read the answers to frequently asked questions about this tax.
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
Because apartments have a site value, you may have to pay land tax on apartments if the site value of the apartment when added to the taxable value of your other properties exceeds $250,000, or if it meets or exceeds the threshold in itself.
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), 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 for the previous four years. You may also be charged penalty tax.
Have you received two or more assessments?
You may receive more than one assessment:
- Individual assessment - if you receive more than one individual assessment in your own name, you must call us on 13 21 61 so that we can correctly record the land you own.
- Joint assessment - you may also receive a separate joint assessment if you own land jointly with others. Each unique combination of owners is considered a different joint ownership, so you may receive more than one joint assessment if you are a member of a number of unique joint ownerships. The person who receives the joint assessment is receiving it on behalf of the other joint owners. If you receive more than one joint assessment for one unique joint ownership, you must call us on 13 21 61 so that we can correctly record the land owned by the joint ownership.
- Trust assessment - if you own land as the trustee of a trust, you may receive a separate trust assessment for each trust for which you are trustee. Each trust assessment should specify the name of the trust, otherwise you must call us on 13 21 61 so that we can correctly record the land held under the trust.
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.
I've received an assessment – what do I do now?
Your land tax assessment should list all Victorian land, including exempt land and your interest in any jointly owned land, that you owned as at midnight on December 31 of the previous year. 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:
- Pay the assessment, or
Contact us within 60 days and request an amendment to your details if they are incorrect
Please note: We do not adjust land tax assessments for property bought, sold or settled during an assessment year. Your solicitor or conveyancer can advise you about any land tax adjustments made on settlement.
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.
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.
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, which 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 2017, a 1.5 per cent absentee owner surcharge (previously 0.5 per cent) 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 and 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 2017, a 1.5 per cent absentee owner surcharge (previously 0.5 per cent) on land tax applies to Victorian land owned by an absentee owner. An absentee owner can be a member of a land tax group.
While land held by a trustee of a trust is not grouped for land tax purposes, 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 5 per cent 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 6.5 per cent from 1 January 2017 (previously 5.5 per cent).
When you don't agree with our assessment
If you think you have been assessed incorrectly and want to formally dispute your land tax assessment, you can lodge an objection.
Even if you have lodged an objection you must still pay your assessment in full by the due date, or you will also be charged 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 a property.
Getting it right
Our priority is to help you pay the right amount of tax at the right time. Learn more.