More taxes! Land tax, windfall gains tax, vacant residential land tax

Published On: October 18, 2023

The Victorian government has recently introduced a bill which, if passed, may create an additional tax burden for land owners. These changes will come into effect as early as January 2024.

Proposed Changes
  • From January 2024 land tax will no longer be apportioned between a vendor and a purchaser at the settlement of the sale of the property.
  • From January 2024, windfall gains tax that has been assessed cannot be passed onto a purchaser to pay under a contract or an option agreement.
  • From January 2025, the vacant residential land tax will be expanded to apply to all vacant residential land across Victoria, previously only affecting inner and middle Melbourne where the property was unoccupied for more than 6 months a year. The tax is 1% of the capital improved value of residential property.
  • From January 2026, land that has been unimproved for 5 or more years in Metropolitan Melbourne will now also be affected by the vacant residential land tax. If you intend to develop the land, then construction should be commenced before this period.
  • Currently, the vacant residential land tax exemptions exclude holiday homes, renovated properties and property acquired for work purposes. From January 2025 the exemption will only be available if the owner’s principal place of residence is in Victoria. From January 2026 there will be exemptions to exclude land contiguous to a principal place of residence and land that cannot be used or developed for residential purposes.
  • Land taxes and rates, including the fire services levy, vacant residential land tax and windfall gains tax may be impacted as the Valuation of Land Act 1960 will be amended to deem certain fixed items as a fixture and accordingly affect the capital improved value of the land. The fixture will be included in the valuation whether it is owned by the owner of the land or by the occupier of the land.
  • An extension of the corporate reconstruction and consolidation concession to sub-sale transactions between members of the same corporate group, effectively providing a 90% discount to the duty which would otherwise be payable on such transactions.

Property owners may need to consider their short to medium term plans in anticipation of the proposed changes.

Our Property Department is willing to discuss your queries in anticipation of this Bill. You can contact us here

We will publish further information after the Bill is passed.

The content of this article is intended to provide a general guide only. You should seek advice for your specific circumstances.

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