Transfer Duty

Transfer duty applies to a broad range of transactions which effect a change in the legal, beneficial or economic interest in Victorian land. It applies equally to local and foreign buyers of Victorian land.

• Residential Development

  6.5% duty on land purchase consideration.

• Residential Investment

  6.5% duty on land purchase consideration.

• Commercial & Industrial Development

  6.5% duty on land purchase consideration provided land hasn’t already transitioned into CIPT regime (refer below).

  Duty is reduced by 50% if the land is located in regional Victoria and used for commercial, industrial or extractive industry purposes.

• Commercial & Industrial Investment

  6.5% duty on land purchase consideration provided land hasn’t already transitioned into CIPT regime (refer below).

  Duty is reduced by 50% if the land is located in regional Victoria and used for commercial, industrial or extractive industry purposes.

• Primary Production

  6.5% duty on land purchase consideration.

Foreign Purchaser Additional Duty (FPAD)

FPAD applies to ‘residential land’ acquired by a ‘foreign person’, and is imposed in addition to normal transfer duty.

Land is ‘Residential’ if:

• capable of use solely or primarily for residential purposes; or
• has a building intended to be converted into residential use; or
• has no building but owner intends to construct a residential building or otherwise undertake land development to construct a residential building (e.g. BTR and MPC); and
• not ‘Commercial Residential Premises’.

A ‘foreign person’ is:

• non-Australian citizens and non-permanent residents;
• companies incorporated outside Australia, or in Australia but with majority foreign control’ and
• trusts in which a foreign person/company/trust has a beneficial interest of more than 50% in the trust capital ’.

• Residential Development

  8% duty (in addition to 6.5%) on residential land purchase consideration unless exempted under FPAD Treasurer Guidelines.

  Exemption possible under FPAD Treasurer Guidelines if a foreign corporation or trust holding land:

  • is Australian based;
  • significantly adds to the supply of housing stock in Victoria; and
  • exhibits good corporate behaviour.

  ‘Commercial Residential Premises’ includes hotels, motels, boarding houses, school-related accommodation, caravan parks and retirement villages.

  BTR and MPC land held by a foreign corporation or foreign trust is potentially exempt under the FPAD Treasurer Guidelines during development phase if project sufficiently adds to supply of housing stock in Victoria.

• Residential Investment

  8% duty (in addition to 6.5%) on residential land purchase consideration unless exempted under FPAD Treasurer Guidelines

  Same definition of ‘Residential’ land applies, so 8% not applicable to ‘Commercial Residential Premises’

  Fully built BTR and MPC is not exempted under FPAD Treasurer Guidelines as neither add to the supply of housing stock in Victoria (which would have already occurred during the BTR or MPC development phase).

• Commercial & Industrial Development

  FPAD does not apply to commercial and industrial land.

• Commercial & Industrial Investment

  FPAD does not apply to commercial and industrial land.

• Primary Production

  FPAD does not apply to primary production land.

Land Tax

Land tax applies annually at 1 January to all Victorian land owned as at 31 December of the preceding calendar year (i.e. 2025 land tax based on land owned at 31 Dec 2024). It applies equally to local and foreign owners of Victorian land.

• Residential Development

  Up to 2.65% annual tax based on the taxable value of all land owned (or co-owned) at 31 December by a natural person, company or trust.

  ‘Taxable value’ is determined by the Valuer-General Victoria and reflects the unimproved value of land, excluding capital improvements such as buildings.

  A surcharge rate of 1-2% applies to land held by a trust (in addition to base 2-3% rate) up to a taxable value of $3 million.

  No special concession for MPC or BTR land during development phase, but BTR land can transition to concessional regime once buildings are constructed (see Residential Investment land).

• Residential Investment

  Up to 2.65% annual tax based on the taxable value of all land owned (or co-owned) at 31 December by a natural person, company or trust.

  No special concession for MPC land.

  For ‘eligible BTR development’ land the taxable value is reduced by 50% for up to 30 years.

  To be an ‘eligible BTR development’:

  • land must have a new or substantially renovated building on it;
  • buildings were constructed to provide dwellings for residential tenancy of at least 3 year term;
  • at least 50 self-contained dwellings;
  • development owned within a unified ownership structure;
  • development managed by a single entity;
  • dwellings first occupied between 1 Jan 2021 and 1 Jan 2032; and
  • dwellings available for rent by general public.
• Commercial & Industrial Development

  Up to 2.65% annual tax based on the taxable value of all land owned (or co-owned) at 31 December by a natural person, company or trust.

• Commercial & Industrial Investment

  Up to 2.65% annual tax based on the taxable value of all land owned (or co-owned) at 31 December by a natural person, company or trust.

• Primary Production

  Up to 2.65% annual tax based on the taxable value of all land owned (or co-owned) at 31 December by a natural person, company or trust provided no general exemption applies and ‘primary production exemption’ (PPE) does not apply.

  ‘PPE’ applies to land used for primary production purposes by, or under licence from, the owner.

Absentee Owner Surcharge (AOS)

AOS applies to Victorian land owned by an ‘absentee owner’.

‘Absentee owner’ means an:

• absentee individual;
• absentee corporation; or
• absentee trust.

‘Absentee individual’ means a non-Australian citizen or non-permanent resident that does not ordinarily reside in Australia.

‘Absentee corporation’ means a company incorporated outside Australia or incorporated in Australia but which an absentee individual controls.

‘Absentee trust’ means a discretionary, fixed or unit trust with at least one absentee person beneficiary.

• Residential Development

  4% annual tax (in addition to base rate) on unimproved land value (ULV) if land is owned by ‘absentee owner’ and no general or specific exemption applies.

  Absentee corporations and trusts may be exempt under AOS Treasurer Guidelines if:

  • Australian-based;
  • make a significant contribution to the economy and community by engaging/using local labour, material and services; and
  • exhibit good corporate behaviour.

  BTR and MPC land held by an absentee corporation or trust during development phase is potentially exempt if AOS Treasurer Guidelines are satisfied.

  BTR land can transition to AOS exemption post-development if it qualifies as an ‘eligible BTR development’ (refer Land Tax for criteria).

• Residential Investment

  4% annual tax (in addition to base rate) on ULV if land owned by ‘absentee owner’ and no general or specific exemption applies.

  Absentee corporations and trusts are generally not exempt under AOS Treasurer Guidelines if they are a mere property investor or landlord.

  However, if BTR in nature, land is potentially AOS exempt for up to 30 years if it is an ‘eligible BTR development’ (refer Land Tax for criteria).

• Commercial & Industrial Development

  4% annual tax (in addition to base rate) on ULV if land owned by ‘absentee owner’ and no general or specific exemption applies.

  Absentee corporations and trusts may be exempt under AOS Treasurer Guidelines (same Guidelines apply as for residential land).

  Industrial and commercial land held by an absentee corporation or trust during development phase is potentially exempt if AOS Treasurer Guidelines are satisfied.

• Commercial & Industrial Investment

  4% annual tax (in addition to base rate) on ULV if land owned by ‘absentee owner’ and no general or specific exemption applies.

  Absentee corporations and trusts are generally not exempt under AOS Treasurer Guidelines if they are a mere property investor or landlord.

• Primary Production

  4% annual tax (in addition to base rate) on ULV if land owned by ‘absentee owner’ and land not otherwise exempt under Primary Production Exemption or some other exemption.

Commercial and Industrial Property Tax (CIPT)

CIPT applies to all Victorian commercial and industrial land (CIL) transitioned out of Victoria’s duty regime. A purchaser of CIL on or after 1 July 2024 can either pay conventional transfer duty of 6.5% upfront (at settlement), or pay fixed instalments of that same liability over a 10 year period. After the 10 years, CIPT will apply as an annual 1% tax (like an additional land tax), and the land will not attract duty again upon subsequent transfer provided it remains CIL in nature. It applies equally to local and foreign owners of Victorian land.

• Residential Development

  CIPT does not apply to residential development land.

  If land is part residential and part commercial, its sole or primary use must be commercial or industrial before CIPT can apply.

  If CIL changes in use (e.g. to residential), CIPT will cease to apply.

  If a purchaser paying transfer duty over the 10 year transition period sells the CIL before year 10, it must pay the unpaid duty at settlement of the sale.

• Residential Investment

  CIPT does not apply to residential investment land.

  If land is part residential and part commercial, its sole or primary use must be commercial or industrial before CIPT can apply.

• Commercial & Industrial Development

  1% annual tax (in addition to annual land tax) on ULV provided no general or specific exemption applies.

  The 1% first applies 10 years after the first dutiable transaction of the CIL after 1 July 2024. Like land tax, it will be assessed against the owner on 31 December in the preceding tax year.

  CIPT will cease to apply if the land is converted to a use other than commercial or industrial (e.g. residential).

  CIPT will not apply if the CIL is subject to a land tax exemption.

• Commercial & Industrial Investment

  The 1% annual tax will apply to commercial and industrial investment land in the same way to commercial and industrial development land.

  For both types of CIL, a purchaser will have an option to take up a transition loan (interest-bearing) from Government as an alternative to paying the transfer duty 100% at settlement. However, the loan will not be accessible by foreign investors without an Australian business.

• Primary Production

  CIPT does not apply to primary production land.

Vacant Residential Land Tax (VRLT)

VRLT applies to residential property in inner and middle Melbourne that was vacant for more than six months in the preceding calendar year. It applies equally to local and foreign owners of Victorian land.

VRLT will be expanded to apply:

• from 1 Jan 2025 to residential land across all of Victoria if the land is vacant for more than 6 months in the preceding calendar year; and
• from 1 Jan 2026 to unimproved residential land in metropolitan Melbourne that has remained undeveloped for at least 5 years and is capable of residential development.

• Residential Development

  1% annual tax (in addition to annual land tax) on capital improved value (CIV) of taxable residential property.

  CIV is a value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process.

  Until 31 Dec 2024 ‘Residential property’:

  • is land that is able to be used solely or primarily for residential purposes, such as a home or an apartment;
  • excludes vacant land, commercial residential premises, residential care facilities, supported residential services or retirement villages.

  MPC and BTR development land with new residential premises constructed on it will not become subject to VRLT provided the premises are sold or leased within two years from the date a building permit for the construction or renovation was issued.

• Residential Investment

  1% annual tax (in addition to annual land tax) on CIV of taxable residential property.

  MPC and BTR development land with new residential premises constructed on it becomes taxable if/when the premises are still vacant two years from the date a building permit for the construction or renovation was issued.

• Commercial & Industrial Development

  VRLT does not apply to commercial and industrial land.

• Commercial & Industrial Investment

  VRLT does not apply to commercial and industrial land.

• Primary Production

  VRLT does not apply to primary production land.

Metropolitan Planning Levy (MPL)

MPL applies if a planning permit is sought to develop land in Metropolitan Melbourne and the estimated cost of development exceeds $1,207,000. It applies equally to local and foreign owners of Victorian land.

• Residential Development

  A 0.0013% MPL rate applies to every $1,000 of estimated development cost, as shown in the planning permit application. If the estimated development cost subsequently increases mid-development, additional MPL is payable.

  Limited exemptions and exclusions apply, and MPL is not deferrable (must be fully paid pre-application).

  No special rules or concessions apply for BTR land or MPC land.

• Residential Investment

  Applies in same way as for residential development land.

  MPL is not refundable if a planning permit application is not lodged, refused, withdrawn, granted and lapses.

• Commercial & Industrial Development

  Applies in same way as for residential development land.

• Commercial & Industrial Investment

  Applies in same way as for residential development land.

• Primary Production

  Applies in same way as for residential development land if the primary production land is in Metropolitan Melbourne.

Growth Areas Infrastructure Contribution (GAIC)

GAIC applies to all land inside Melbourne’s Urban Growth Boundary (UGB) that is situated in a ‘contribution area’. It applies equally to local and foreign owners of Victorian land.

• Residential Development

  If land is situated inside Melbourne’s UGB and zoned to be in a GAIC ‘contribution area’, a one-off GAIC contribution of between $110,950-$131,160 per hectare applies, usually payable upon sale, subdivision or application for a building permit (BP).

  Deferrable up to 100% in event of purchase, and up to 70% upon subdivision or BP application (with initial 30% payable upon subdivision or BP application).

  Deferred 70% payable in staged (proportional) manner over a maximum 18 year period as land is progressively subdivided.

  No special rules or concessions apply for BTR land or MPC land.

• Residential Investment

  Applies in same way as for residential development land, but will usually be paid while land is being developed and transitioned into a new investment asset.

  Unimproved residential investment land will be liable for GAIC. Newly improved/developed land will not usually be liable, as the GAIC will usually have been paid during the development stage.

• Commercial & Industrial Development

  Applies in same way as for residential development land.

  GAIC rate and rules are no different as between residential development and commercial-industrial development land.

• Commercial & Industrial Investment

  Applies in same way as for residential development land, but will usually be paid while commercial-industrial land is being developed and transitioned into a new investment asset.

  Unimproved commercial-industrial land will be liable for GAIC. Newly improved/developed land will not usually be liable, as the GAIC will usually have been paid during the development stage.

• Primary Production

  While still zoned for primary production use will not be liable for GAIC as will not be within GAIC ‘contribution area’. If rezoned for residential or commercial-industrial use, land will move within GAIC ‘contribution area’ and become liable.

  GAIC will be payable as a one-off contribution of between $110,950-$131,160 per hectare, usually upon sale, subdivision or BP application, but with payment subject to deferral and staging rules mentioned under Residential Development land.

Windfall Gains Tax (WGT)

WGT applies when any Victorian land (not subject to GAIC) is rezoned by a planning scheme amendment resulting in a value uplift of more than $100,000. It applies equally to local and foreign owners of Victorian land.

• Residential Development

  A 62.5% WGT rate applies if the rezoning gives rise to a taxable value uplift of between $100,000 - $499,999. A 50% rate applies if the taxable value uplift is $500,000 or greater.

  The ’taxable value uplift’ is the difference between the capital improved value (CIV) of the land before rezone (so-called CIV1) and the CIV after rezone (so-called CIV2), as determined by the Valuer-General Victoria.

  WGT is payable by the registered owner of land, subject to a number of exemptions and exclusions. WGT is deferrable by a registered owner at rezone once-only until the earlier of 30 years and the next sale/duty event.

  No special rules or concessions apply for BTR land or MPC land.

• Residential Investment

  Applies in same way as for residential development land.

  If residential investment land is acquired pre-rezone, WGT will not apply at that time and the new owner will be liable if the land is rezoned during its ownership period.

  If residential investment land has already been rezoned and has a deferred WGT liability, the WGT will be payable by the registered owner at time of sale (and is prevented under law from pass-on to the purchaser).

• Commercial & Industrial Development

  Applies in same way as for residential development land. WGT rate and rules are no different as between residential development and commercial-industrial development land.

  If commercial-industrial development land is acquired pre-rezone, WGT will not apply at that time and the new owner will be liable if the land is rezoned during its ownership period.

  If commercial-industrial development land has already been rezoned and has a deferred WGT liability, the WGT will be payable by the registered owner at time of sale (and is prevented under law from pass-on to the purchaser).

• Commercial & Industrial Investment

  Applies in same way as for residential development land. WGT rate and rules are no different as between residential development and commercial-industrial investment land.

  If commercial-industrial investment land is acquired pre-rezone, WGT will not apply at that time and the new owner will be liable if the land is rezoned during its ownership period.

  If commercial-industrial investment land has already been rezoned and has a deferred WGT liability, the WGT will be payable by the registered owner at time of sale (and is prevented under law from pass-on to the purchaser).

• Primary Production

  Applies in same way as for residential development land. WGT rate and rules are no different. Upon rezone, WGT will be payable on former primary production land.