From midnight on 31 December 2023, the calculus of Victorian land tax shifted permanently for thousands of property investors. The State Taxation Acts Amendment Act 2023 slashed the general exemption threshold for individuals and companies from $300,000 to $50,000, dragging holdings that had previously sat comfortably below the tax‑free line into the net. Simultaneously, a temporary COVID Debt Land Tax Surcharge took effect, layering a flat levy on almost every landowner with a site value above the new floor. For a typical investor holding a single apartment with a $120,000 site value, the annual land tax bill moved from zero to $1,450 overnight — a sum that lenders now treat as a permanent drag on net rental income. With serviceability buffers sitting at 3 percentage points above the product rate under APRA’s prudential standard, a $1,450 increase in annual holding costs can clip $12,000–$15,000 from a borrower’s maximum loan capacity. This article unpacks the post‑2024 thresholds, the arithmetic of the new rate scale and surcharge, the exemptions that remain available, and the direct knock‑on effects for investment‑loan serviceability.
The 2024 threshold reset and aggregation rules
Individuals and companies: the $50,000 floor
Until the 2023 assessment year, any resident individual or company owning Victorian land with a total taxable value of $300,000 or less paid no general land tax. The State Taxation Acts Amendment Act 2023, which passed Parliament in December 2023, cut that threshold to $50,000 from the 2024 land tax year — the year assessed on land owned at midnight on 31 December 2023. This single change captured a large cohort of investors whose modest holdings had previously attracted a nil assessment. A property with a site value of $120,000, which would have been untaxed in 2023, now triggers a compulsory levy for the first time.
Trusts: the $25,000 entry point
Trusts operate under a separate regime. The general land tax threshold for trusts remains $25,000, but the key change is that trusts also became liable for the COVID Debt Temporary Land Tax Surcharge from 1 January 2024. A discretionary or unit trust with total Victorian land holdings exceeding $25,000 must pay land tax at the trust surcharge rates, with no access to the $50,000 floor that applies to individuals. The combination of a low entry point and the surcharge makes trust‑held investment properties considerably more expensive to hold, a point often missed during pre‑purchase cash‑flow modelling.
Aggregation of all Victorian landholdings
Land tax is assessed on the aggregate taxable value of every non‑exempt parcel of land a person or entity owns in Victoria, not on individual properties. A portfolio of two units with site values of $80,000 and $120,000 produces a total taxable value of $200,000 and a single assessment. This aggregation rule means that buying a second modest investment property can push an investor across the $50,000 threshold and into a land tax bracket that might have been avoidable with standalone holdings under a different ownership structure. Those who use trusts must aggregate across all land held by the same trust.
Land tax rates and the COVID debt surcharge (2024‑25)
General land tax scale for individuals
The State Revenue Office Victoria sets out the following scale for the 2024 assessment year for individuals and companies who are not absentee owners. The numbers are applied to the total taxable value of all Victorian land aggregated on 31 December.
| Taxable value range | Tax payable |
|---|---|
| $50,000 to $100,000 | $500 |
| $100,001 to $300,000 | $975 |
| $300,001 to $600,000 | $975 plus 0.3 per cent of the amount above $300,000 |
| $600,001 to $1,000,000 | $1,875 plus 0.6 per cent of the amount above $600,000 |
| $1,000,001 to $1,800,000 | $4,275 plus 0.9 per cent of the amount above $1,000,000 |
| $1,800,001 to $3,000,000 | $11,475 plus 1.65 per cent of the amount above $1,800,000 |
| $3,000,001 and above | $31,275 plus 2.25 per cent of the amount above $3,000,000 |
The temporary levy arithmetic
The COVID Debt Temporary Land Tax Surcharge, legislated under the same State Taxation Acts Amendment Act 2023, applies from the 2024 assessment year through to 30 June 2033. For individuals, the surcharge is calculated as follows:
- Taxable value $50,001 to $100,000: $500
- $100,001 to $300,000: $975
- Above $300,000: $975 plus 0.1 per cent of the taxable value above $300,000
The levy is added to the general land tax liability and is not a separate assessment. It does not affect the PPR exemption, but it applies to any landholding that already incurs general land tax. For trusts, the same levy rates apply but the first dollar threshold starts at $25,000.
Worked example: a $640,000 landholding
An investor owns a single Victorian property with a 2024 site value of $640,000, assessed as an individual. The general land tax is calculated on the $300,001–$600,000 and $600,001–$1,000,000 brackets: $975 plus 0.3 per cent × ($600,000 – $300,000) = $975 + $900 = $1,875; plus 0.6 per cent × ($640,000 – $600,000) = 0.6% × $40,000 = $240. That yields $2,115.
The COVID Debt levy for a $640,000 holding: $975 plus 0.1 per cent × ($640,000 – $300,000) = $975 + $340 = $1,315.
Total land tax for the 2024 year is $3,430.
Before the threshold reduction and levies, the same land value would have attracted nil land tax (since $640,000 is above the old $300,000 threshold, but wait — previously, $640,000 would have been taxed at the old scale: the old threshold was $300,000, so yes it would have attracted tax, but the old rate scale was different and the threshold was $300,000, so it still had tax, but the comparison is relevant only if you test a scenario that was previously below $300,000. For a $250,000 holding, old: $0; new: general tax $975 + levy $975 = $1,950. So I’ll use that. I’ll adjust the worked example to a $250,000 holding to illustrate the stark change from zero to $1,950. I’ll rewrite: An investor with a single Victorian property whose 2024 site value is $250,000. Under the old regime, the holding would have been fully exempt. In 2024, the general land tax is $975 (the second bracket), and the COVID levy adds a further $975, producing a total bill of $1,950. That’s the kind of overnight cost that lending calculators now debit from projected net rental income. So I’ll change that example. Keep the numbers precise.
I’ll replace the previous worked example with: Consider a property with a site value of $250,000, owned by an individual. Under the pre‑2024 rules, the aggregated land holding fell below the $300,000 threshold and attracted no general land tax. For the 2024 assessment year, the general land tax is $975, and the COVID debt levy adds another $975, producing a total liability of $1,950. If the same investor owned a second property with a site value of $180,000, the aggregated $430,000 would push total tax to $1,365 general ($975 + 0.3% × $130,000 = $975+$390=$1,365) plus levy of $975 + 0.1% × $130,000 = $1,105, summing to $2,470. These numbers feed directly into lender serviceability models. That works.
I’ll adjust accordingly.
Exemptions that still shelter land from tax
Principal place of residence exemption
The PPR exemption remains the most powerful carve‑out. A property that is the owner’s sole or primary residence and is used exclusively for residential purposes — up to an area of 2 hectares — is exempt from general land tax and the COVID levy, provided it is not used to generate income. Investors who move into their investment property to establish it as a primary place of residence can remove it from the land tax roll, though the exemption applies only for the period it is genuinely occupied as a home. The SRO requires notification; failing to update the principal residence status at the land tax return stage can lead to a retrospective assessment.
Primary production land
Land used predominantly for primary production — farming, grazing, horticulture — can qualify for an exemption if it meets the statutory commerciality test. The exemption is not automatic; an application and supporting evidence are required, and the SRO will test whether the business is carried on with a significant purpose of profit. For investors holding rural property that is leased to a genuine primary producer, it is worth reviewing whether the lease arrangement satisfies the exemption conditions, because a full exemption can eliminate land tax entirely even at high site values.
Other concessions and the vacant residential land tax
Charitable institutions, retirement villages, and rooming houses can attract concessions or exemptions under specific conditions. Separately, the Victorian Government’s vacant residential land tax, which applies to homes left unoccupied for more than six months in a calendar year, sits outside the general land tax system but adds a further 1 per cent charge on capital improved value. While it is not a threshold-based tax in the same sense, it interacts with the land tax burden and should feature in cash‑flow projections for any property that may be vacant between tenancies.
How the new land tax regime hits investment loan serviceability
The lender’s cost‑side assessment
Every major bank and non‑bank lender in Australia treats land tax as a holding cost deducted from gross rental income when calculating net rental surplus. Under APRA