In recent months there have been several increases to taxes on property that potentially affect property nationwide while Victoria has expanded the reach of some its property taxes.

Victorian Land Tax

Victoria has increased land taxes for all Victorian property, excluding property that is currently exempt, like the principal residence. They are introducing a “temporary” increase that will last for ten years. For land valued at over $300,000 the surcharge equals $975 plus 0.1 percent of land value over $300,000. For land between $100,000 and $300,000 a flat $975 surcharge applies. Between $50,000 and $100,000 the surcharge is $500.

Victorian Commercial and Industrial Property

Victoria has also begun to transition away from stamp duty on the purchase of commercial and industrial property to an annual 1 percent land tax. Until a property is transacted after 1/7/24 there will be no consequences. However once a property is transferred (50 percent or more), the new regime will apply. The new scheme works in two steps

1. Either pay stamp duty upfront or pay over ten years. If the property is later sold, no additional stamp duty will be payable as long as the property remains commercial or industrial but the balance of the initial stamp duty still needs to be paid.
2. Ten years after the property transaction, an annual property tax will apply in addition to normal land tax.

Basically the government will get to charge for stamp duty plus receive an annual property tax site for the life of the property once a commercial or industrial property has been transferred after 1/7/24.

Victorian Vacant Residential Land Tax

Victoria has also widened its vacant residential land tax to include all parts of the state. Previously it only applied to selected regions in the metropolitan area. This tax only applies to residential property where the purchaser was liable to firb fees or should have been liable to firb fees at the time of purchase and the property is not occupied or available for rent for at least half a year in the previous year. The rate will now also be increased progressively for each year the property is vacant. The rate is 1 percent of the Capital improved value in the first year the property is vacant, 2 percent in the second and 3 percent in the third and following years. From 1/7/26 this tax will also apply to unimproved land that is capable of being developed for residential purposes but has remained undeveloped for five years.

Foreign Land Tax Surcharge

Australia’s two biggest states have doubled the amount that foreign persons are charged for land tax. The foreign land tax surcharge in both New South Wales and Victoria has increased from two percent of land value to four percent per year

Foreign Investor Fees

The federal government has also announced a significant increase to fees for foreign investors. The FIRB application fee that foreign investors need to pay to apply to purchase existing residential dwellings will increase by 300%. The annual vacancy fee that is payable if the property is left vacant will increase by 600%.