Land tax is assessed on site value, not on what you paid
The taxable figure is the site value — the value of the land alone, excluding the house, the granny flat, the driveway and every other improvement — as determined by the Valuer-General Victoria. It appears on your council rates notice, usually alongside the capital improved value and the net annual value. On a typical Melbourne middle-ring house the site value is a large majority of the price; on an apartment it can be a small fraction, because the land is shared across the whole plan of subdivision. That single fact explains most of the land-tax difference between houses and units.
Liability attaches to the owner of the land as at midnight on 31 December, and the assessment for that ownership date is issued in the following months. How long you held the property during the year does not change the assessment — only whether you owned it on the last day. Settlement adjustments between a buyer and a seller are a contractual matter negotiated in the contract of sale; they do not change who the State Revenue Office assesses.
Where to find your site value
Your council rates notice is the fastest source. If you do not have one — for example, you are assessing a property before you buy — the site value is not published on the listing, and a real-estate agent’s estimate is not a substitute. A vendor statement (section 32) will disclose rates and outgoings, and the Valuer-General’s general valuation is the underlying dataset.
Where the COVID Debt Levy sits inside these numbers
The COVID Debt Repayment Plan did not create a separate line on your assessment. It changed the scale itself, and the numbers in the table above already contain it. Three components: a $500 flat surcharge on total taxable site value from $50,000 to under $100,000; a $975 flat surcharge from $100,000 to under $300,000; and, above $300,000, that $975 plus an increase to the land tax rate of 0.10 percentage points. The State Revenue Office states these are legislated to apply until 30 June 2033.
The trust bands are $250,000, not $300,000
For land held on trust the COVID Debt Levy bands are $100,000 to under $250,000 and $250,000 and above — not the $300,000 used on the general scale. Content that applies the $300,000 breakpoint universally is wrong for every trust-held parcel between $250,000 and $300,000 of site value.
Land held on trust pays from $25,000 — the surcharge scale
Land held on trust is assessed on a separate scale with a $25,000 threshold instead of $50,000, and a surcharge rate that runs until the two scales converge at $3,000,000. The point of convergence matters: above $3,000,000 of taxable site value, trust and general rates are identical at $31,650 plus 2.65% of the excess, so the surcharge is a feature of small and mid-sized holdings, not large ones.
| Total taxable site value | Land tax payable (trust scale) |
|---|---|
| Less than $25,000 | Nil |
| $25,000 to less than $50,000 | $82 + 0.375% of the amount above $25,000 |
| $50,000 to less than $100,000 | $676 + 0.375% of the amount above $50,000 |
| $100,000 to less than $250,000 | $1,338 + 0.375% of the amount above $100,000 |
| $250,000 to less than $600,000 | $1,901 + 0.675% of the amount above $250,000 |
| $600,000 to less than $1,000,000 | $4,263 + 0.975% of the amount above $600,000 |
| $1,000,000 to less than $1,800,000 | $8,163 + 1.275% of the amount above $1,000,000 |
| $1,800,000 to less than $3,000,000 | $18,363 + 1.1072% of the amount above $1,800,000 |
| $3,000,000 and above | $31,650 + 2.65% of the amount above $3,000,000 (same as the general rate) |
Source: State Revenue Office Victoria, land tax current rates, retrieved 6 August 2026 [1]. The 1.1072% in the $1.8m–$3m band is not a typographical error; it is the published rate.
Same $700,000 site value as the worked example above, held on trust instead of in an individual name: $4,263 + 0.975% × $100,000 = $5,238, against $2,850 on the general scale. The difference on that parcel is $2,388 for the year.
We are not a registered tax agent and we do not recommend a structure
The comparison above is arithmetic on two published scales, and it is only one input. Ownership structure also carries duty, capital gains tax, land tax aggregation, asset-protection, borrowing and estate-planning consequences, none of which we can see and none of which we are licensed to advise on. Take the numbers to a registered tax agent and a property lawyer before you sign a contract, not after.
The 4% absentee owner surcharge, and the separate 15 January deadline
The absentee owner surcharge is an additional 4% of the taxable value of Victorian land owned by an absentee owner, charged on top of ordinary land tax. It has been 4% from the 2024 land tax year; it was 2% for the 2020 to 2023 land tax years, and lower again before that. Combined with the top general rate, that produces a maximum marginal rate of 6.65%.
From 1 January 2026, New Zealand citizens are subject to the same absentee-owner rules as other foreign citizens. Very few Victorian land tax guides have picked that change up, and it is the kind of change that turns a compliant owner into a non-compliant one without anything happening to the property.
Two deadlines, one month apart, constantly confused
Absentee owner status must be notified to the State Revenue Office by 15 January of the following year. Vacant Residential Land Tax must be notified by 15 February. They are different obligations under different parts of the regime — check which one applies to you, and note that both can apply to the same property.
Vacant Residential Land Tax: 1%, then 2%, then 3% of capital improved value
Vacant Residential Land Tax is a separate annual tax on residential land that was not lived in for more than six months of the preceding calendar year. Two things make it bite far harder than ordinary land tax. It is charged on capital improved value — the whole property, land plus buildings — not on site value. And it escalates with each consecutive year of liability: 1% of capital improved value in the first liable year, 2% in the second consecutive year, and 3% from the third consecutive year onward. Before the 2025 tax year it was a flat 1% for every liable property.
| Consecutive year liable | Rate | Amount on CIV of $900,000 |
|---|---|---|
| First | 1% of capital improved value | $9,000 |
| Second consecutive | 2% of capital improved value | $18,000 |
| Third and later consecutive | 3% of capital improved value | $27,000 |
Source: State Revenue Office Victoria, Vacant Residential Land Tax current rates, retrieved 6 August 2026 [6]. Worked on a stated capital improved value; your own assessment uses the Valuer-General’s figure for your property. The escalation is the design of the tax — it is meant to be cheaper to let the property than to leave it empty.
What counts as “vacant”
The test is occupancy, not intention. Residential land is vacant if it was not used and occupied for more than six months in the calendar year preceding the tax year. The six months do not have to be continuous, and they do not have to be the same occupant — a property let for three months, lived in by the owner for two, and let again for two adds up to seven and is not vacant. Holding a property empty while you decide what to do with it is exactly the case the tax was written for.
State-wide since 1 January 2025
Until the end of 2024 Vacant Residential Land Tax applied only to 16 inner and middle Melbourne council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Merri-bek, Port Phillip, Stonnington, Whitehorse and Yarra. From 1 January 2025 it applies to residential land anywhere in Victoria, including regional towns and holiday-home country. If you own an empty house in Ballarat, Bendigo, Geelong or on the Bellarine, the change reached you and nothing about your property had to alter for it to do so.
Undeveloped metropolitan land from 1 January 2026
From 1 January 2026 the tax extends to land in metropolitan Melbourne that sits in a zone other than a non-residential zone, is capable of residential development, and has remained undeveloped for a continuous period of five years or more. That category is charged at a flat 1% of capital improved value with no escalation. The same flat 1% applies to new residential land that has been unused, unoccupied and unsold for more than three years — the completed-but-unsold apartment case.
The 15 February notification deadline
It is 15 February, not 15 January
The State Revenue Office states you must notify it by 15 February 2026 if you owned Victorian residential land that was vacant during 2025. Older material — including at least one stale State Revenue Office news item — says 15 January, which is the absentee owner surcharge deadline, not this one. Vacant Residential Land Tax is a self-reporting regime: the absence of a bill is not evidence that you are not liable, and failing to notify can attract penalty tax and interest.
The holiday-home exemption and its four-week test
A holiday home is exempt from Vacant Residential Land Tax if the owner or their relatives use and occupy it for at least four weeks in the calendar year. The four weeks do not have to be consecutive, and use by different people can be added together. Two conditions catch people out: the owner must have a principal place of residence in Australia — owned or rented — and only one holiday home exemption can be claimed per year, no matter how many holiday properties are owned.
The exemptions that actually matter to an investor
The principal place of residence exemption is the large one, and it attaches to the land you actually live on — not to a second property you also own, and not to a property you intend to move into later. Beyond it, the exemptions most often relevant to a residential investor are the primary production exemption for genuinely farmed land, the exemption for land used by a charity, and, on the Vacant Residential Land Tax side, the holiday home exemption, the exemption for a property used for work purposes for at least 140 days in the year, and transitional exemptions after a change of ownership or where a property is genuinely under construction or renovation.
Each of these has conditions the State Revenue Office applies strictly, and several require you to claim them rather than having them applied automatically. Read the exemption page for the specific one you are relying on before you assume it covers you [11].
Three neighbouring Victorian property taxes people confuse with land tax
- Windfall Gains Tax — commenced 1 July 2023
- A tax on the increase in land value caused by a rezoning. Where the uplift is between $100,000 and $500,000, 62.5% applies but only to the amount above $100,000. Where the uplift is $500,000 or more, 50% applies to the full uplift. It is triggered by the rezoning, not by a sale, which is what makes it dangerous for land banked through an amendment.
- Commercial and Industrial Property Tax — commenced 1 July 2024
- Commercial and industrial property that has an “entry transaction” on or after 1 July 2024 begins a 10-year transition, after which an annual tax of 1% of site value applies (0.5% for eligible build-to-rent). The State Revenue Office’s own worked example is that an entry transaction on 1 July 2024 produces a first liable year of 2035 — the tax starts in the first calendar year after the 10-year transition ends, so naive arithmetic that lands on 2034 is wrong.
- Emergency Services and Volunteers Fund — increase deferred
- The increase to the fixed charge for non-principal-place-of-residence residential land, previously legislated to commence on 1 July 2026, was deferred by the Building Legislation and Treasury Legislation (Tax Relief) Amendment Act 2026, which received Royal Assent on 23 June 2026. The new commencement is a date to be declared by the Treasurer by notice in the Government Gazette. Until that notice is published there is no date to plan around, and anyone quoting one is guessing.
Is land tax deductible?
Land tax on a property that is rented or genuinely available for rent is generally deductible, and land tax on your own home is not, because the home is not income-producing. One detail is worth getting right: the Australian Taxation Office ties the deduction to the income year the liability relates to, not the year you happen to pay the bill. Land tax paid in arrears across several years is therefore not simply a deduction in the year of payment — it may require amending earlier returns.
This is a question for a registered tax agent
PremiumRea is a licensed Victorian buyer’s agency. We are not a registered tax agent and we do not calculate anyone’s deduction. The point above is included because getting the timing wrong is a common and avoidable error, not as advice about your return.
What land tax looks like across 345 PremiumRea transactions
Across the 345 anonymised transactions PremiumRea publishes as open data under CC-BY-4.0 (DOI 10.5281/zenodo.20095886, settled January 2023 to September 2025), the median land size was 652 m² and the median purchase price was $676,730. Those two numbers together are the reason land tax is a live question for this kind of buyer rather than a theoretical one: the strategy that produces the yield — a house on enough land to add a second dwelling — is the same strategy that produces a land-heavy site value.
That is the trade-off to price in before you offer, not after the assessment arrives. A 652 m² middle-ring block and a 250 m² townhouse can carry the same purchase price and very different site values, and it is the site value that the State Revenue Office aggregates against everything else you own in Victoria. We are describing a pattern in our own completed transactions, not forecasting anyone’s bill.
Is Victoria the most expensive state for land tax?
Not on every measure, and the question is usually asked in a way that cannot be answered. Victoria has a low threshold — $50,000 — so a small holding becomes taxable sooner than it would in a state with a threshold in the hundreds of thousands. But thresholds, marginal rates, aggregation rules, trust treatment and foreign surcharges all differ between states, and the comparison flips depending on the size of the portfolio and how the value is distributed across parcels.
The honest version of the answer is that the ranking depends on your specific holding, and that the only reliable way to compare is to run your own site values through each state revenue office’s published scale. Anyone presenting a single national ranking without stating the portfolio it was computed on is comparing something you cannot check.
Source · CC-BY 4.0
Melbourne Investment Property Portfolio (2020–2026) · 345 transactions