Owning property in Victoria may incur land tax. Generally if a property is classified as an individual’s principle place of residence than the property is generally exempt.
If a property is determined to be liable for land tax, then the State Revenue Office will issue the land tax assessment notice which will list all properties that are owned by the individual or relevant entity. This will include any other properties either jointly owned with another or any interest in any trust-like land that a person may hold.
The land tax assessment notice includes a site valuation for each property which in turn is then used to calculate the entity’s land tax liability.
There are a few exemptions to land tax that may be applicable as the assessment includes what land is owned, what the land is used for and the total value of the land held. These exemptions include the following:
- The property is your principle place of residence; or
- The land is primary production land; or
- The land is used as a rooming house or is used by charitable institutions.
Land tax is currently calculated on the total taxable value of an individuals land holdings as at midnight on 31 December of the preceding year. If an individual land holding exceeds $250,000.00 then they will be determined to be liable for land tax. The value of land holding is reviewed biannually (every 2 years) and is calculated on the capital improved value issued on the council rates notice for the property. It is important to note that in relation to apartments there will be a site value for the apartment and that is then included in the total taxable value of an entity’s land holding.
However it is proposed that as of 2019 land tax will be revalued annually rather than biannually. This is likely to result in a higher amount of land tax being applied due to the current strength of the property market.
From 1 January 2018, any dwelling located within inner and middle Melbourne which is unoccupied for a period of more than 6 months in a calendar year, may be subject to the vacant residential land tax. Dwellings under construction will not be liable for the vacant residential land tax for a period of 2 years from the date of a building permit for construction or renovation. If an individual considers that they should be eligible for an exemption to the tax in certain circumstances such exemption may be applied. It is the individual’s responsibility to claim any exemption.
It is important for a land owner to be aware of their individual land tax liabilities in the state of Victoria, especially when an individual owns or jointly owns numerous properties located in the state.
If you require advice or further information in relation to any of the matters discussed in this article, please contact our Conveyancing team on 03 5273 5209.