Land Tax… what is it & how much is going to cost me?

Hey Victorian investors this one’s for you.

Whilst anything that involves the word tax usually puts everyone to sleep, we’ll try and make this as brief and informative as possible.

So what is Land Tax?

Land tax is a state tax, calculated on the freehold land you own in that State.

The tax rate that applies depends on:

  • what type of owner you are (eg individual, trustee, company, foreign resident)

  • the total taxable value of your land, and

  • if any exemptions apply.

Who has to pay it?

In Victoria, Land Tax is payable for unimproved land (not including the buildings upon it) that you own which is:

  • Not your primary residence

  • Worth more than $250,000 combined.

This includes rental and investment properties, commercial properties, factories, holiday homes, vacant land and other non-exempt land.

Who doesn’t have to pay it?

Exemptions are for:

  • Your Principal Place of Residence (PPR)

  • A farm, or Primary Production Land (PPL)

  • A ‘Rooming house’ or charitable housing for people with low-incomes

  • Land used exclusively for charitable purposes — poverty, education, religion etc.

Still confused if you have to pay land tax or not?

This is a great tool to use - Do I have to pay land tax

How do you calculate how much you have to pay?

There is a great calculator you can use - Land tax calculator

Land tax is calculated using the taxable value (site value) of land provided by municipal councils.

Site value is the unimproved value of the land excluding capital improvements such as buildings and is available on your council rate notice.

When is it paid?

Land tax is assessed on a calendar year basis on the land you own at midnight on 31 December before your assessment is issued. For example, the land you own at midnight on 31 December 2020 is used to calculate land tax in 2021.

Please note this information was correct at the time of publishing, but may have changed since. Please make sure you talk to your accountant, financial planner and check the State Revenue Office for the most up to date info.

 

Hope that wasn’t too dry.

 

Tabitha

Dianne Kristel Catindoy