Several changes to Victoria’s property tax laws have been made after the State Taxation Acts and Other Acts Amendment Act 2023 received royal assent in December.

Vacant residential land tax (VLRT)

From 1 January 2025, VRLT will be expanded to apply to all residential land across the state that has been vacant for more than six months.

From 1 January 2025, a new VRLT will apply for non-exempt land. The progressive rate increases based on consecutive years liable are:

  • Year 1: 1% of land’s value
  • Year 2: 2% of land’s value
  • Year 3: 3% of land’s value

The definition of vacant residential land will be expanded from the 2025-26 tax year to include unimproved residential land that has been unimproved for five years or more in established areas of metropolitan Melbourne.

From 1 January 2025, the VRLT exemption for new residential premises will be extended to allow a maximum exemption period of three years, provided the owner has made genuine and reasonable efforts to sell the land.

Land tax and windfall gains tax

Land tax apportionment between seller and buyer for a contract of sale will be prohibited from January 2024, except for high-value property transactions.

Windfall tax will no longer be allowed to be passed on to a purchaser under a contract or option agreement once the windfall gains tax liability has been assessed, starting January 2024.

Valuations of land, capital-improved value

The definition of capital-improved value will now include all items affixed to the land, regardless of who owns the items and whether they are considered fixtures at law.

Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.

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