Land tax is one of those costs that catches many Victorian property buyers off guard — especially investors. Unlike stamp duty, which you pay once, land tax is an annual charge levied by the State Revenue Office on the unimproved value of your land. If you're buying an investment property, vacant land, or a holiday home, it's essential to understand how it works.
Who pays land tax?
Land tax is paid by the owner of the land as at 31 December each year. The tax is assessed on the total unimproved value of all taxable land you own in Victoria — not just the property you're buying.
Your principal place of residence is exempt from land tax. So if you're buying a home to live in, you generally won't pay it. But if you're buying a rental property, a holiday house, vacant land, or commercial property, land tax applies.
How is land tax calculated?
Land tax is calculated on the unimproved value of your land (also called the site value), which is determined by the Valuer-General. This is the value of the land alone, without any buildings or improvements.
For 2026, the general land tax rates in Victoria apply a tax-free threshold of $50,000. Above that, rates start at $275 plus 0.2% of the value above $50,000, and increase progressively. For land valued above $300,000, the rate is $775 plus 0.5% of the value above $300,000. Higher brackets apply for land valued above $600,000 and $1,000,000.
If you own multiple investment properties, the site values are aggregated. This can push you into a higher tax bracket. For example, owning two properties with a combined land value of $700,000 means you pay tax on the full $700,000, not two separate assessments.
What to check in the Section 32
The vendor must disclose in the Section 32 Vendor's Statement whether land tax applies to the property. Look for the land tax section in the vendor's disclosure. It will tell you:
- Whether land tax is currently payable on the property
- The amount of land tax last assessed
- The site value used for the assessment
If the vendor has been paying land tax, that does not automatically mean you will too. If you're buying the property as your principal place of residence, you can claim the exemption.
Land tax and the contract of sale
Land tax is typically adjusted at settlement. If the vendor has paid land tax for the full year but you're settling partway through, your settlement statement will include a land tax adjustment. This means you reimburse the vendor for the portion of the year after settlement.
Vacant residential land tax
Since 2018, Victoria has imposed an additional Vacant Residential Land Tax on properties in certain council areas that are left unoccupied for more than six months in a calendar year. The rate is 1% of the capital improved value annually. If you're buying a property that has been vacant, check whether this tax has been assessed.
Absentee owner surcharge
If you are an absentee owner (generally, someone who is not an Australian citizen or permanent resident and does not ordinarily reside in Australia), an additional surcharge of 4% applies on top of the standard land tax rates. This can make land tax a very significant ongoing cost.
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.