Victorian land tax assessments: What property owners need to know

Property owners in Victoria are bracing for changes in land tax assessments that could impact financial plans. The state government has implemented measures aimed at recovering funds to address the COVID-19 debt, affecting various categories of landowners. Here’s a breakdown of what you need to know:

Surcharge Implementation

Beginning June 2023 and spanning a decade, the government has introduced surcharges based on property values:

• Properties valued between $50,000 and $100,000 face a flat surcharge of $500.

• For properties valued between $100,000 and $300,000 (or $250,000 for trusts), the surcharge is a flat $975.

• Properties exceeding $300,000 (or $250,000 for trusts) will incur a $975 flat surcharge plus an additional 0.1% increase in land tax rate.

Expansion of Vacant Residential Land Tax (VRLT)

• Effective December 2023, the VRLT now encompasses all of Victoria. This tax, ranging from 1% to 3% of the Capital Improved Value (CIV), applies to vacant residential properties starting January 1, 2025, but is retroactively based on occupancy status from January 1, 2024.

Holiday Home Exemption

• A notable change includes an expanded holiday home exemption. Previously, this exemption applied only to properties used by the owners themselves. Now, it extends to properties used by the owner's relatives for a minimum of four weeks annually, whether continuously or cumulatively. Relatives include spouses/domestic partners, lineal ancestors and descendants, siblings, as well as spouses of children and siblings.

Considerations for Company or Trust-owned Properties

• Owners of properties held under companies or trusts should carefully assess their situation. While there's no guarantee of changes in this area, it’s advisable for owners to consider leasing out such properties for at least six months of the 2024 year to avoid potential VRLT assessments for 2025.

These changes underscore the importance of staying informed about evolving tax policies and their implications for property ownership. As regulations continue to adapt to economic conditions, property owners must remain proactive in managing their assets and financial obligations. Keeping abreast of these developments can help mitigate unexpected tax burdens and ensure compliance with regulatory requirements.

Please contact us if you have any concerns or questions