Calculators

Major Victorian Property Tax Changes effective from 1st January 2024

Land Tax-Property Clearance Certificate:

• The new law prevents the adjustment of land tax between a vendor and purchaser in contracts for the sale of land from 1 January 2024.
• A change to the original Bill confirms it does not apply to contracts entered on or before 31 December 2023, that settle on or after 1 January 2024.
• It does not apply to contracts where the consideration exceeds $10 million (to be indexed).
• An adjustment clause will be unenforceable (unless the transitional provisions apply).
• Prosecution and potential penalties can apply (currently $11,540 for individuals and $57,5700 for corporations) for breaches of the new law.

Windfall Gains Tax:

• From 1 January 2024 the new law prevents the passing on or adjustment of a windfall gains tax (‘WGT’) liability, that has been assessed, on the subsequent sale of that land.
• The intention is that WGT liability, once assessed, will be reflected in the sale price, and not dealt with as an adjustment.
• Prosecution and potential penalties can apply (currently $11,540 for individuals and $57,700 for corporations) for breaches of the new law.
• These changes do not apply to contracts (and compliant options) entered on or before 31 December 2023, that settle on or after 1 January 2024.

Vacant residential Land Tax (VRLT):

• VRLT is expanded from existing limited council areas in inner Melbourne to all land in Victoria.
• In general terms a property is ‘vacant’ if it has not been occupied for 6 months in the previous year.
• There are some exemptions that may apply such as a holiday home, but conditions apply for all exemptions.
• Properties that are ‘vacant’ (basically not occupied for 6 months in the previous year) will be taxed a minimum of 1% and up to 3% of the CIV (Capital Improved Value, not the land value).
• It is an ongoing annual tax and paid in addition to land tax.
• The rate of tax will increase if the property is vacant for consecutive years (1% first year, 2% second year and 3% third year) to a maximum of 3%.
• The new tax starts 1 January 2025, but is based on occupancy from 1 January 2024, so effectively starts 1 January 2024.

Unimproved residential Land:

• From 1 January 2026 the VLRT will apply to unimproved residential land in Melbourne (specific local council areas) that are capable of but have remained undeveloped for 5 years.
• The intention is that land capable of development cannot sit vacant without attracting the VRLT.

For more information Visit https://www.sro.vic.gov.au