2024 Victorian Land Tax Changes for Property Investors
Jeff Anderson
Land tax is an annual tax based on the total taxable value of all the land you own in Victoria, excluding exempt land such as your home. Land tax is calculated on the ‘site value’ (i.e unimproved value) of all taxable land you own as at midnight on 31 December each year.
As part of the Victorian Government’s Covid Debt Levy to recoup some of the budget deficit resulting from Covid-related Government spending, land tax rates were increased, effective from 1 January 2024. The increase will apply from the 2024 land tax year for 10 years, to 2033.
What has changed
| Land Value | 2023 Land Tax General Rate |
2024 Land Tax General Rate |
| Less than $50,000 | Nil | Nil |
| $50,000 to < $100,000 | Nil | $500 |
| $100,000 to < $300,000 | Nil | $975 |
| $300,000 to < $600,000 | $375 plus 0.2% of amount > $300,000 | $1,350 plus 0.3% of amount > $300,000 |
| $600,000 to < $1,000,000 | $975 plus 0.5% of amount > $600,000 | $2,250 plus 0.6% of amount > $600,000 |
| $1,000,000 to < $1,800,000 | $2,975 plus 0.8% of amount > $1,000,000 | $4,650 plus 0.9% of amount > $1,000,000 |
| $1,800,000 to < $3,000,000 | $9,375 plus 1.55% of amount > $1,800,000 | $11,850 plus 1.65% of amount > $1,800,000 |
| $3,000,000 and over | $27,975 plus 2.55% of amount > $3,000,000 | $31,650 plus 2.65% of amount > $3,000,000 |
For land held in trusts, additional surcharge rates apply on top of the general rates (for land valued below $3 million).
Absentee owner surcharge (AOS) and vacant residential land tax (VRLT) can also apply on top of the general rates in certain circumstances. For the 2024 land tax year, the AOS is 4 per cent (up from 2 per cent). The introduction of higher AOS is designed to discourage leaving properties vacant, aiming to improve housing availability.
VRLT applies to homes that were vacant for more than six months in the preceding calendar year. For the 2024 land tax year, the VRLT is 1 per cent of the capital improved value of land.
From 1 January 2026 the VRLT will also apply to unimproved residential land in Melbourne (specific local council areas) that are capable of but have remained undeveloped for 5 years. For full details and an online calculator, visit the State Revenue Office’s website at: https://www.sro.vic.gov.au/calculators/land-tax-calculator
What is the impact of these changes for property investors and renters
We at Ross-Hunt Real Estate in Surrey Hills manage thousands of investment properties across Melbourne. Many investors have multiple properties, and some have owned them for 20 to 30 years and longer.
I am constantly talking to people who simply do not have the money to pay these large taxes, many of whom have no choice but to sell. In some cases, I am hearing of people’s land tax bill having gone from $1,500 per annum to $25,000-$100,000.
Most investors buy with a retirement plan in place and intend to hold long term, however that is all changing and fast. Investors are selling en masse; I have never seen such a quick change of sentiment from investors in my 38 years in the industry.
Most tell me that when they add up all the taxes and charges due to owning an investment property, that it is just not worth it anymore. Many are now buying investment property interstate with much lower land tax rates, which explains the super strong growth in median prices in states like Queensland, South Australia and Western Australia over the past 6 to 12 months. The Northern Territory is the only place in Australia with zero land tax.
It’s not just the land tax though; there are agents management fees, council and water rates, owner’s corporation fees, maintenance, repairs, annual smoke alarm checks, compliance issues. New laws are coming into effect in 2025 where all investment properties must have air-conditioning and heating installed.
Nearly every property our agency is selling at the moment is to an owner occupier and not investors, placing even further stress on a red-hot rental market. The 800,000 new homes promised by the State Government need to be built sooner than the forecasted 10 years, especially when you consider we have a further 1 million plus migrants heading to Australia over the next three years, with most coming to Melbourne.
Jeff Anderson is Sales Director at Ross-Hunt Real Estate in Union Rd, Surrey Hills