In short: Victorian land tax is an annual tax on the total site value of all taxable land you own at midnight on 31 December, assessed by the State Revenue Office under the Land Tax Act 2005 (Vic). Your principal place of residence is exempt. For 2024 to 2033 the tax starts at $500 once your total site value reaches $50,000, and rises through a series of brackets. Absentee owners pay a 4% surcharge.
Land tax is the ongoing cost most first-time investors forget, and since the 2024 threshold changes it reaches a single modest investment property in Melbourne's outer north. Our Victorian land tax calculator gives a quick estimate. This page sets out how it is calculated, who is exempt, and how it fits into an investment loan decision.
What the law says
The Land Tax Act 2005 (Vic) imposes land tax on the owner of taxable land as at midnight on 31 December each year, for the following calendar year. Key features:
- Site value, not purchase price. Land tax is calculated on the site value (the unimproved value of the land) determined by the Valuer-General and shown on your council rates notice. Buildings are ignored.
- Aggregation. All taxable land you own in Victoria is added together and taxed on the total, so two cheap blocks can push you into a higher bracket than either alone.
- Exemptions. Your principal place of residence, primary production land, charitable land and some other categories are exempt.
- Surcharges. Absentee owners pay a 4% surcharge, and land held in certain trusts is taxed at higher trust rates unless a nomination is made.
- Assessment and payment. The SRO issues assessments from early in the year, payable in a lump sum or by instalments.
- Objections. You can object to an assessment, including the valuation, within 60 days of receiving it.
General rates for 2024 to 2033
| Total taxable site value | Land tax |
|---|---|
| Less than $50,000 | Nil |
| $50,000 to less than $100,000 | $500 |
| $100,000 to less than $300,000 | $975 |
| $300,000 to less than $600,000 | $1,350 plus 0.3% of the amount over $300,000 |
| $600,000 to less than $1,000,000 | $2,250 plus 0.6% of the amount over $600,000 |
| $1,000,000 to less than $1,800,000 | $4,650 plus 0.9% of the amount over $1,000,000 |
| $1,800,000 to less than $3,000,000 | $11,850 plus 1.65% of the amount over $1,800,000 |
| $3,000,000 and over | $31,650 plus 2.65% of the amount over $3,000,000 |
These rates include the temporary COVID debt levy components that apply until 2033. Trust rates and absentee rates are higher; check the SRO tables (sro.vic.gov.au) for the current schedule.
Land tax and property sales
Since 1 January 2024, amendments to the Sale of Land Act 1962 (Vic) generally prohibit a vendor from passing their land tax liability on to a purchaser as a settlement adjustment on residential contracts below a high value threshold. For most home and investment purchases, that means the vendor wears the land tax for the year of sale. A land tax clearance certificate obtained during conveyancing confirms whether any unpaid land tax is secured against the property.
How land tax is assessed, step by step
- Ownership at 31 December. If you settle a purchase on 20 December, you are the owner at midnight on 31 December and liable for the following year. Settle on 5 January and you are not.
- Site values gathered. The SRO uses the Valuer-General's most recent site values for each property.
- Exempt land removed. Your home is excluded, provided you actually live there as your principal place of residence and haven't claimed the exemption on another property.
- Aggregation and calculation. Remaining site values are added and the rate applied.
- Assessment issued. Check the properties listed, the values and the exemptions claimed.
- Pay or object. Payment options and a 60-day objection window.
Worked examples
One investment property. You live in your own home in Roxburgh Park (exempt) and own a $650,000 investment house in Craigieburn with a site value of $380,000. Land tax is $1,350 plus 0.3% of $80,000, which is $1,590 a year.
Two investment properties. You add a second investment unit in Epping with a site value of $320,000. Your total taxable site value is $700,000. Land tax is $2,250 plus 0.6% of $100,000, which is $2,850 a year. Note that the second property added $1,260 to the bill, more than it would have cost on its own, because of aggregation.
Absentee owner. If the two-property investor lived overseas and was a foreign natural person, the 4% surcharge would apply on top, adding $28,000 to the annual bill. Temporary visa holders living in Victoria are generally not absentees.
Moving out of your home. If you move out of your Roxburgh Park home and rent it out, the PPR exemption ends and its site value is added to your total from the next 31 December.
What it means for your home loan and investment
- Cash flow. Land tax is a holding cost alongside rates, insurance, owners corporation fees and interest. Model it in the investment property cashflow calculator.
- Serviceability. Lenders don't always list land tax as a separate expense, but a broker preparing an investment property loan will, particularly for investors with several properties.
- Deductibility. Land tax on a rental property is deductible against rental income for the year it relates to, which reduces the after-tax cost. See negative gearing explained.
- Ownership structure. Holding property in a company or trust changes the land tax outcome, sometimes for the worse because of trust surcharge rates and the loss of aggregation thresholds. Get accounting advice before you decide.
- Timing settlement. A settlement in early January rather than late December can defer a year of land tax on an investment purchase.
- Vacant property. A rental left empty for more than 6 months may also attract vacant residential land tax, which is separate and larger.
GNT Finance builds land tax into the cash-flow analysis for every investment loan, so the loan structure and repayment type suit the true holding cost. Our home-loan service is at no cost to you in most cases.
Common mistakes
- Estimating from the purchase price. Site value is usually well below it; use the rates notice.
- Forgetting aggregation. Buying a second investment property changes the bracket for all of them.
- Claiming PPR on a property you don't occupy. The SRO data-matches rental bonds and electoral rolls.
- Missing the objection window. Sixty days from the assessment, including objections to the site value.
- Assuming the vendor can pass on land tax. For most residential contracts since 2024, they can't.
Frequently asked questions
Who has to pay land tax in Victoria?
Anyone who owns taxable Victorian land with a total site value of $50,000 or more at midnight on 31 December, other than exempt land. Your principal place of residence is exempt, so most owner-occupiers with a single home pay nothing. Investors, holiday home owners, and people who own land through companies or trusts are the usual taxpayers.
Is my home exempt from land tax in Victoria?
Yes, if it is your principal place of residence and you use and occupy it as your home. The exemption applies to one property per owner or couple. It ends if you move out and rent the property, although there are limited transitional rules, and it does not cover a second home or a holiday house. A home you are building can qualify during construction under certain conditions.
How is land tax calculated on an investment property?
Land tax is charged on the site value of the land, not the purchase price or the building value, aggregated with any other taxable land you own. A single Craigieburn investment with a $380,000 site value attracts $1,590 a year under the 2024 to 2033 rates. Add a second property and the combined site value moves you up the scale.
Can I object to my land tax assessment?
Yes. You can lodge an objection with the SRO within 60 days of receiving the assessment if you believe the site value is too high, an exemption has been missed, or the ownership details are wrong. Objections to valuation are referred to the Valuer-General. You should generally pay the assessment while the objection is considered, and a refund follows if you succeed.
Does the buyer or seller pay land tax at settlement in Victoria?
The registered owner at 31 December is liable for that year. Since 1 January 2024, for most residential contracts the vendor cannot pass their land tax on to the purchaser as a settlement adjustment. The purchaser becomes liable from the first 31 December after settlement if the property is not their principal place of residence.
Talk to GNT Finance
Before you buy an investment property, you should know its full annual holding cost, land tax included. GNT Finance will model it with you and structure the loan to match. Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.