Land tax is a recurring cost for property investors and owners in Victoria, calculated based on the total taxable value of land holdings. While land tax is unavoidable for many, there are legal strategies to minimise or avoid it.
In this guide, we’ll explain how land tax works, who is liable, and strategies to reduce or legally avoid land tax in Victoria.
What is Land Tax in Victoria?
Land tax is an annual tax imposed by the State Revenue Office (SRO) of Victoria on the cumulative taxable value of all non-exempt land you own as of 31 December each year.
Who Pays Land Tax?
- Owners of investment properties
- Owners of vacant land
- Businesses and developers with commercial or industrial property
Who is Exempt?
- Your primary place of residence (main home) is exempt.
- Farmland (if it meets primary production criteria).
- Certain charitable, religious, or public land.
Land Tax Thresholds (2024 Rates in Victoria)
Total Taxable Land Value | Land Tax Payable |
Less than $50,000 | No land tax |
$50,000 – $99,999 | $500 |
$100,000 – $299,999 | $975 |
$300,000 – $599,999 | $1,350 + 0.3% of amount above $300,000 |
$600,000 – $999,999 | $2,250 + 0.6% of amount above $600,000 |
$1,000,000 – $1,799,999 | $4,650 + 0.9% of amount above $1,000,000 |
$1,800,000 – $3,000,000 | $11,850 + 1.65% of amount above $1,800,000 |
For $3 million and over, land tax payable is $31,650 + 2.65% over $3 million
Higher rates apply to trusts, companies, and absentee owners (foreign investors). Note that an accountant Melbourne will be able to perform the calculations for you if unclear as to how much land tax that you will be paying.
How to Legally Avoid or Reduce Land Tax in Victoria
1. Claim the Principal Place of Residence (PPR) Exemption
- If the property is your main home, it’s 100% land tax-free.
- Must be your primary residence (live there for most of the year).
- Can apply even if you move temporarily (e.g., for work or renovations).
2. Use Multiple Owners or Split Ownership
Land tax applies per owner.
Holding property jointly with a partner, family member, or company reduces individual liability.
Be cautious of trusts (higher land tax rates apply unless it’s a fixed trust).
💡 Example:
- If you and your spouse own a $600,000 investment property, you will be each be assessed on $300,000 (assuming you own no other properties).
3. Buy Property Through a Trust or Company (With Planning)
- Land tax is calculated separately for different legal entities.
- A company or trust owning land separates liability from personal assets.
- Discretionary trusts face higher tax rates, but fixed/unit trusts/companies may help
🚨 Warning: Trusts must be structured correctly—best to consult a property tax accountant such as Nobel Thomas.
4. Threshold if possible! ($50,000 for Individuals, $25,000 for Trusts)
- Land tax only applies if taxable land holdings exceed the threshold.
- Keeping land holdings below $50,000 (individuals) or $25,000 (trusts) can avoid tax entirely.
5. Take Advantage of Primary Production Land (Farmland) Exemption
- Rural land used for farming, grazing, or crop production can be exempt from land tax.
- The owner must demonstrate genuine primary production activity.
Example: A small acreage rented to a farmer may qualify for exemption.
6. Consider Buying Apartments Instead of Houses
- Apartments usually have lower land values than standalone houses.
- Smaller land holdings mean less chance of hitting the tax threshold or lower land tax per se.
- Useful for investors looking to minimise exposure.
7. Develop and Sell Property Quickly
- Land tax applies as of 31 December each year.
- If you buy, develop, and sell within a year, you maybe be able to avoid the tax.
- Avoids unnecessary holding costs for property developers.
💡 Tip: Aim to settle before December 31 to prevent an extra year of land tax.
8. Transfer Property to a Low-Tax Entity or Family Member
- If a family member has no taxable land, transferring property to them may reduce tax.
- Stamp duty and capital gains tax (CGT) may apply, so weigh costs carefully.
🚨 Caution: Seek legal and tax advice from an accountant Melbourne or property tax accountant before transferring assets.
9. Avoid Foreign Owner Surcharges
- Foreign investors pay higher land tax rates and absentee owner surcharges.
- Becoming an Australian citizen or resident removes extra charges.
- Using a local partner or company may reduce liability (with tax planning).
10. Check for Temporary Exemptions
Some properties may qualify for temporary land tax relief, including:
- Vacant land intended for a new home (PPR exemption applies).
- Hardship provisions in case of financial distress.
Final Thoughts :
While land tax is unavoidable for many investors, careful planning can reduce or eliminate liability. By structuring ownership correctly, leveraging exemptions, and managing property portfolios effectively, you can legally minimise land tax in Victoria.
If you’re unsure about your best options, consulting a property tax accountant or accountant Melbourne is a wise move. We’re only a phone call away.
