Land Tax Update
Landlord and property investors are starting to feel the pressure of holding their properties with increased land tax bills over the years. With the most recent land tax updates from 1st January 2024, thousands of property owners will also be receiving their first land tax assessment, while many others could be selling their properties as it is no longer financially feasible to keep holding onto them.
The significant rise in land tax bills over the past couple of years can be attributed to several key factors. Firstly, the Victorian Government introduced the COVID Debt Repayment Plan in 2024, which lowered the tax-free thresholds for land tax rates and temporarily increased the rate by 0.1% for general and trust taxpayers with properties valued over $300,000 and $250,000, respectively.
Additionally, the increase in property site values has also contributed to higher land tax bills. Unlike other states, Victoria does not use averaging for land valuation purposes, leading to some taxpayers experiencing increases of over 200% in their land tax bills over the last two years.
2024 General Land Tax Rates
General land tax tax-free threshold for individuals and companies will decrease from $300,000 to $50,000.
An increased land tax rate will be applied across all brackets above $300,000 as well.
| Total taxable value of land holdings | Land tax payable | Increase from previous year |
| < $50,000 | Nil | |
| $50,000 to < $100,000 | $500 | $500 |
| $100,000 to < $300,000 | $975 | $975 |
| $300,000 to < $600,000 | $1350 plus 0.3% of amount > $300,000 | $1,350 |
| $600,000 to < $1,000,000 | $2250 plus 0.6% of amount > $600,000 | $2,250 |
| $1,000,000 to < $1,800,000 | $4650 plus 0.9% of amount > $1,000,000 | $4,650 |
| $1,800,000 to < $3,000,000 | $11,850 plus 1.65% of amount > $1,800,000 | $11,850 |
| $3,000,000 and over | $31,650 plus 2.65% of amount > $3,000,000 | $31,650 |
2024 Trust Land Tax Rates
Two additional brackets introduced for taxable land values between $25,000 and $249,999.
An increased land tax rate will be applied across all brackets above the new threshold too.
| Total taxable value of land holdings | Land tax payable | Increase from previous year |
| < $25,000 | Nil | |
| $25,000 to < $50,000 | $82 plus 0.375% of amount > $25,000 | $82 |
| $50,000 to < $100,000 | $676 plus 0.375% of amount > $50,000 | $676 |
| $100,000 to < $250,000 | $1338 plus 0.375% of amount > $100,000 | $1,338 |
| $250,000 to < $600,000 | $1901 plus 0.675% of amount > $250,000 | $1,901 |
| $600,000 to < $1,000,000 | $4263 plus 0.975% of amount > $600,000 | $4,263 |
| $1,000,000 to < $1,800,000 | $8163 plus 1.275% of amount > $1,000,000 | $8,163 |
| $1,800,000 to < $3,000,000 | $18,363 plus 1.1072% of amount > $1,800,000 | $18,363 |
| $3,000,000 and over | $31,650 plus 2.65% of amount > $3,000,000 | $31,650 |
Absentee owner surcharge (AOS)
Any property that is owned by either an absentee person, corporation or trust will be subject to an additional surcharge rate being the absentee owner surcharge.
This is aimed at targeting any property owners with a foreign interest. The AOS will apply on top of the land tax that is payable at the general and surcharge rates. From 1st January 2024 the AOS will increase from 2% to 4%.
Conclusion
For most landlords, land tax can start out of as a minor holding cost for their property but can become one of the most expensive costs if they are not careful with how they structure their property holdings.
We strongly recommend speaking with your accountant regarding any future property purchase to ensure that you have the optimum ownership structure to minimise your land tax obligations.
Written by James Nguyen, Senior Accountant
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