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

  Applies in same way as for residential development land.

• Commercial & Industrial Development

  Up to 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

  Applies in same way as commercial & industrial development land. 

• Primary Production

  Applies in same way as for residential development land.

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

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 up to 6.5% transfer duty) 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.

  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 up to 6.5% transfer duty) 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. 2026 land tax is based on land owned at 31 Dec 2025). It applies equally to local and foreign owners of Victorian land.

• Residential Development

  0.3% 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 0.375% to 2.65% applies to land held by a trust (in addition to base 0.3-2.65% 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

  0.3% 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;
  • dwellings available for rent by general public; and
  • the rental agreement must not be subject to any restrictions except those required to ensure public health and safety or to provide social affordable housing. 
• Commercial & Industrial Development

  0.3% 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

  0.3% 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

  0.3% 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 annual 0.3-2.65% land tax) 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 annual 0.3-2.65% ) 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 annual 0.3-2.65% ) 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 annual 0.3-2.65% ) 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 annual 0.3-2.65% ) 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

  A reduced rate of 0.5% of the site value applies to vacant BTR 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 usual 0.3-2.65% 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 the 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)

From 1 January 2025, VRLT applies to residential land across all of Victoria if the land was vacant for more than six months in the preceding calendar year.  It applies equally to local and foreign owners of Victorian land.

From 1 January 2026, VRLT will be expanded to apply to unimproved residential land in metropolitan Melbourne that has remained undeveloped for at least 5 years and is capable of residential development.

• Residential Development

  From 1 January 2025, a progressive rate of VRLT applies.

  VRLT is calculated on the capital improved value (CIV) of taxable land. 

  The rate of VRLT is based on the number of consecutive tax years the land has been liable for VRLT and is:

  • 1% of the CIV of the land for the first year the land is liable for VRLT where the land was not liable for VRLT in the preceding tax year;

  • 2% of the CIV of the land where the land is liable for VRLT for a second consecutive year; and

  • 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year. 

  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

  Applies in same way as for residential development land.

• 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 $1,271,000 (due to be increased by CPI on 1 July 2025). It applies equally to local and foreign owners of Victorian land.

• Residential Development

  A 0.13% 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 $115,530 to $137,230 per hectare applies (with rates due to increase on 1 July 2025), 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 17 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, will move within GAIC ‘contribution area’ and become liable.

  GAIC will be payable as a one-off contribution of between $115,530 to $137,230 per hectare applies (due to increase on 1 July 2025), 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 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.

Congestion levy

The levy is charged each calendar year on off-street private and public car parking spaces in two specified levy areas.

• Residential Development

  The levy areas are located within inner Melbourne and comprise a Category 1 (red) area and a category 2 (blue) area – viewable here , and each area attracts different levy amounts. 

  In 2026,  car parks in the expansion area for Category 2 will become subject to the congestion levy based on usage in 2025.

  For a public car park, the owner and operator, as at 1 January of each assessment year, are jointly and severally liable for the levy unless an exemption or concession applies.

  For a private car park, the owner as at 1 January of each assessment year is liable to pay the levy.

  In 2025, the levy for each non-exempt parking space is: 

  •  Category 1 area - $1,750

  •  Category 2 area - $1,240

  Exemptions include:

  • A car parking space used exclusively by a resident to park their car while they are at home is exempt.

  • If parking is provided by a hotel, serviced apartment or club guests in conjunction with their accommodation, noting the guests must be overnight guests.
• Residential Investment

  Applies in same way as for residential development land.

• 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

  Unlikely to apply to primary production land.

Cladding rectification levy

This levy is administered by the Victorian Building Authority.

• Residential Development

  The levy will be payable if there is a BP for a building:

  • that is not, or will not be, in regional Victoria
  • that is, or will be of any of classes 2 to 8 (see here); and
  • that has a cost of whole of building works of $800,000 or more.

  The rate ranges from 0.128 cents in the dollar to 0.82 cents in the dollar.

• Residential Investment

  Applies in same way as for residential development land.

• 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.

Melbourne Strategic Assessment (MSA) levy

This levy is administered by the Department of Energy, Environment and Climate Action and is intended to fund conservation programs and reserves and help mitigate any impacts from development on biodiversity.

• Residential Development

  The levy only needs to be paid if the land falls within the MSA levy area – viewable here.

  The levy rate is calculated based on the area and type of habitat coverage and scattered trees on a land parcel, with rates varying per hectare for different native vegetation and species habitats. 

  Similar to GAIC, there are a number of events that trigger an obligation to pay the levy – such as receiving statement of compliance.  An application can also be made to stage payment of the levy. 

• Residential Investment

  Applies in same way as for residential development land.

• 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.

Short stay levy

Applies from 1 January 2025 to short stays in Victorian property.

• Residential Development

  The levy may be payable if bookings are accepted for a stay in Victorian accommodation that is less than 28 consecutive days and charge a fee for the stay.

  The levy is 7.5% of the total booking fees paid, including fees and charges. 

  The levy does not apply to a short stay in a property that is the principal place of residence (PPR) of the owner or renter of that property. 

  The levy does apply to a short stay in accommodation such as: 

  • an entire house and apartment; and
  • a private room in a house (where the house is not the PPR of the owner or renter of that house).

  It does not apply to a stay in a hotel, motel or similar. 

• Residential Investment

  Applies in same way as for residential development land.

• Commercial & Industrial Development

  Not applicable.

• Commercial & Industrial Investment

  Not applicable.

• Primary Production

  Applies in same way as for residential development land.