Victoria to hike land tax, stamp duty as part of budget measures

Victorian Treasurer Tim Pallas has announced a suite of measures ahead of the release of this week’s state budget, including plans to increase the land tax for taxable properties worth more than $1.8 million.

The changes hope to strike a balance “between those wanting to buy their first property and large property investors who continue to profit from soaring property values."

Once in place, the land tax will increase by 0.25 percent for taxable land holdings valued between $1.8 million and $3 million. Taxable land holdings higher than $3 million will also increase by 0.30 percent.

The Treasurer said that the new measures will only be felt by a fraction of the 10 percent of Victorians who pay land tax, and estimates they will bring in more than $380 million a year.

“All up, we invested $49 billion in the last budget to support families and businesses through the pandemic using our balance sheet,” Pallas said.

“Now, we're taking all the hard and necessary actions to make our tax system fairer and more progressive.”

But the news has been met with fierce opposition. Real Estate Institute of Victoria president Leah Canlan said the changes would deal a significant blow to an already struggling property sector.

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"There's high vacancy, there's lots of unpaid rent and this is just another effective tax that those property investors now have to manage,” she said.

"We don't want to see Victoria become the state no one wants to invest in and with additional taxes for the property sector, that's where we're heading."

Along with the changes to the land tax, the Victoria government will introduce a premium stamp duty rate for property transactions exceeding $2 million. 

This will see stamp duty payable increase to $110,000, plus 6.5 percent of the dutiable value in excess of $2 million.

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