How does land tax work?
You pay land tax if the total taxable value of all the Victorian land you own, individually or jointly, as at 31 December, is equal to or exceeds $250,000 ($25,000 for trusts). Exempt land is not included in the total taxable value of land you own. The rate of tax you pay depends on the total taxable value of all your taxable land.
Land tax is different to vacant residential land tax, which applies to homes in inner and middle Melbourne that were vacant for more than six months in a calendar year.
Your 2019 land tax is calculated on the site value of all taxable land you owned on 31 December 2018. We use the site values prepared by councils in 2018 to calculate your 2019 land tax. Most Victorian land has increased in value since it was previously valued in 2016. This means the total taxable value of your land will have increased, affecting the amount of land tax you have to pay.
You may have received a land tax assessment for the first time. If so, we have information and tools to help you understand why and what you should do.
What land is taxed?
You may have to pay land tax if you own, either individually or with others, any of the following in Victoria:
- Investment properties, including residential rental properties.
- Commercial properties such as retail shops, office premises and factories.
- Holiday homes.
- Vacant land.
Who is a land owner?
Land owners can be individuals, companies or trustees, who:
- Hold the freehold title to land.
- Hold a lease of Crown land.
- Hold a Crown land licence with an absolute or conditional right to acquire the land.
- Are a life tenant.
- Manage a title-based, time-sharing scheme.
- Are a beneficiary or unitholder of certain trusts.
Sometimes, when land is sold, the existing owner and incoming owner are considered the owner for land tax purposes.
The personal representative of a deceased estate may have land tax obligations during the administration period.
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.
Land tax does not apply to exempt land, such as:
- Your home, known as your principal place of residence (PPR).
- Your farm, known as primary production land (PPL).
- Rooming houses and charitable institutions.
If you rent out your primary home or change your address, the exemption ends and you must notify us immediately.
Do I have to pay land tax?
Use our handy online tool to find out if you have to pay land tax. It provides general guidance on the circumstances in which land tax is payable and the thresholds and exemptions that can remove or reduce land tax.
If you are buying or selling a property, a land tax clearance certificate tells you if land tax is owed on the property.
A 1.5 per cent absentee owner surcharge on land tax applies to Victorian land owned by an absentee owner. This surcharge is an additional amount payable over the general and trust surcharge rates of land tax. If you are an absentee owner, it is included in the land tax figure set out in your assessment.
When are land tax assessments issued?
Land tax assessments are generally sent 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. For example, if 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 and previous four years. You may also be charged penalty tax
Assessments can be paid in a lump sum or by AutoPay Instalments. The easiest way to pay is by registering for BPAY View and receiving your assessment online. You can also pay by credit card or at any bank, although a fee may apply at banks other than Westpac.
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 at midnight on 31 December of the previous year. Your home, if you have one, will be clearly highlighted as your principal place of residence.
You need to check your assessment to confirm that all details are correct, including:
- All land you own is listed – if it is not, penalty tax may apply if you do not lodge an amendment request within 60 days.
- You have only received exemptions for which you are eligible – if you have received exemptions that you are not eligible for, penalty tax may apply unless you lodge an amendment request within 60 days.
- Land you have sold is not included.
- Land eligible for an exemption has been marked as exempt, including your principal place of residence.
You can then:
- pay the assessment, or
- contact us within 60 days and request a change to your assessment to correct any incorrect information or add any missing information.
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.
I’ve received more than one assessment – why?
You may receive more than one assessment:
- Individual assessment – you should only receive one individual assessment in your own name. 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 receive one or more joint assessment(s) in addition to your individual assessment if you own land jointly with others. Because each unique combination of owners is considered a different joint ownership, 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.
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, the trust has to pay land tax if the aggregate of the trust's taxable Victorian land holdings 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. This 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.
A 1.5 per cent absentee owner surcharge on land tax applies to Victorian land owned by an absentee owner, including 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.
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 the 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 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 property's vendor, purchaser or mortgagee.
Vacant residential land tax
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 inner or middle Melbourne is left vacant for more than six months in a calendar year.
If you own vacant residential property that attracts this tax, we send you a separate vacant residential land tax assessment. The vacant property will also be included in the total taxable value of your land for land tax purposes.
Read answers to frequently asked questions about vacant residential land tax and information on understanding your vacant residential land tax assessment.
Getting it right
Our priority is to help you pay the right amount of tax at the right time. Learn more.