2026 Land Tax Victoria: What Melbourne Investors Need to Know

If you owned Victorian property at midnight on 31 December 2025, your 2026 land tax position is already locked in. What you can still control is whether the assessment is correct: the site value, the exemptions applied, the trust settings, and whether vacant residential land tax or the short stay levy has quietly attached to your holdings.

Victoria's land tax settings changed substantially from the 2024 land tax year under the COVID Debt Repayment Plan, and those settings run to 2033. More Victorian landowners now have a land tax liability on holdings that previously fell below the general threshold. This guide sets out the 2026 rates, the assessment rules, and the deadlines Melbourne investors need to act on.

Who Pays Victorian Land Tax in 2026?

The 31 December ownership test matters more than most investors realise. A sale during 2026 does not, by itself, transfer the 2026 land tax liability from the assessed owner. Settlement adjustments between vendor and purchaser are a contractual matter; the State Revenue Office (SRO) assesses whoever owned the land at midnight on 31 December 2025. Timing an acquisition or disposal around that date is a legitimate planning point.

Equally important: land tax is calculated on site value, not market value. Site value is the value of the land alone, excluding buildings and other improvements, as determined by the Valuer-General. It is not the purchase price and not the capital improved value on your council rates notice. Land tax is generally assessed on the aggregated site value of all taxable Victorian land you own, excluding exempt land such as your principal place of residence (Land Tax Act 2005 (Vic) ss 19 and 36).

What Is the Land Tax Threshold in Victoria in 2026?

Two changes arrived together in 2024 and are often conflated. The COVID Debt Repayment Plan cut the general threshold from $300,000 to $50,000 and added fixed charges and a rate increase for the 2024 to 2033 land tax years. The $25,000 starting threshold for trust surcharge rates is not a 2024 creation: it existed well before the COVID plan and simply continues to apply.

Most discretionary, fixed and unit trusts are potentially subject to the trust surcharge rates, which apply up to 0.375 percentage points above the general rates, subject to the notification, nomination and excluded-trust rules in the Land Tax Act 2005 (Vic) (s 46A). Certain trusts, including complying superannuation trusts, can be excluded from the trust surcharge regime, subject to the relevant requirements. That does not make SMSF-owned land exempt from ordinary land tax; it means the surcharge rates may not apply. We cover how trust structures work more broadly in our guide to trusts in Australia.

An ordinary company holding land in its own right is generally assessed under the general scale, not the trust rates. A corporate trustee is different because it holds land in its capacity as trustee. Related corporations can also be grouped for land tax purposes (ss 47 to 50), so holding properties across multiple companies does not necessarily multiply the threshold. Ownership structure questions like these sit at the heart of our personal tax advisory work for families with property holdings.

What Are Victoria's Land Tax Rates for 2026?

The general rates for the 2026 land tax year, as published on the SRO's current land tax rates page, are:

Source: State Revenue Office Victoria, land tax current rates (2024 to 2033 land tax years). Trust surcharge rates differ and start at $25,000.

A worked example

Say a Melbourne investor personally owns two rental properties with site values of $430,000 and $350,000, and no exempt land. The aggregated site value is $780,000, which falls in the $600,000 to $1 million bracket. The 2026 land tax is $2,250 plus 0.6% of $180,000 (the value above $600,000), which is $1,080. Total: $3,330. Before the 2024 changes, the same investor would have been assessed from a $300,000 threshold at lower rates; the same holdings now carry a materially higher annual cost. Modelling that cost across future years is part of our tax planning work, and the ongoing land tax bill belongs in any purchase feasibility alongside property tax and investment accounting questions like CGT and negative gearing.

Who Pays the Absentee Owner Surcharge in 2026?

The legislation uses specific definitions, and simply living overseas does not automatically make an individual an absentee owner. The surcharge targets foreign individuals who do not ordinarily reside in Australia, along with absentee corporations and absentee trusts. The SRO's guidance on understanding the absentee owner surcharge sets out the tests in detail.

The notification obligation is the trap. An owner who is an absentee owner at 31 December 2025 must generally notify the SRO by 15 January 2026 through the absentee owner notification portal. Penalty tax can apply for failure to notify. This is particularly relevant for Melbourne property held through overseas ownership structures, where the absentee status of a shareholder or beneficiary can change the assessment of the whole entity.

Does Vacant Residential Land Tax Apply in 2026?

From 1 January 2025, VRLT expanded from specified Melbourne council areas to relevant residential land throughout Victoria (with limited exceptions such as the alpine resorts). The often-repeated claim that it covers only metropolitan Melbourne is out of date. The trigger remains vacancy: broadly, residential land unoccupied for more than 6 months in the preceding calendar year, per the SRO's guide to understanding vacant residential land tax.

From 1 January 2026, a new limb captures undeveloped residential land in metropolitan Melbourne: land capable of residential development, within an applicable zone, that has remained undeveloped continuously for at least 5 years. The 5-year period can include time before 1 January 2026, so long-held vacant blocks are already in scope (Land Tax Act 2005 (Vic) ss 34A to 34G). If you hold a subdividable block, this interacts directly with the issues in our guide to subdividing your backyard.

VRLT rates: capital improved value, not site value

Unlike ordinary land tax, VRLT is calculated on capital improved value (the land plus buildings), and there is no equivalent of the $50,000 threshold. The current VRLT rates escalate with consecutive years of liability:

Source: State Revenue Office Victoria, VRLT current rates. A 1% rate applies to certain categories, including qualifying undeveloped land in metropolitan Melbourne.

Notification by 15 February, even if an exemption applies

Owners of residential land that was vacant in 2025 must generally notify the SRO through the VRLT portal. For the 2026 year, the SRO confirmed notifications were due by 15 February 2026. Notification may still be required where the owner believes an exemption applies, and penalty tax can apply for failure to notify.

The 6-month vacancy rule is subject to specific statutory exemptions, including qualifying holiday homes, recently acquired properties, certain newly residential land, qualifying work accommodation, and certain land under construction or renovation. These should be reviewed before assuming VRLT is payable or not payable.

How Does the Short Stay Levy Affect Hosts in 2026?

The levy generally applies to qualifying Victorian short stays of less than 28 consecutive days, subject to specific exclusions and exemptions. A short stay in premises that are the owner's or renter's principal place of residence is excluded, and commercial residential accommodation such as hotels, motels and hostels is treated differently. The SRO's overview of the short stay levy and its guide to understanding the levy set out the details.

Who pays depends on how the booking is made. Where the booking goes through a platform such as Airbnb or Stayz, the booking platform is liable to pay the levy. Where the booking is accepted directly, the property owner (or tenant) is liable, which means registration and return obligations sit with you. Even where the platform remits, the levy changes pricing, demand and net returns, so it belongs in your numbers.

• Build the levy into your cash flow forecasts rather than discovering it in the settlement statements.
• Keep income and expense coding clean so levy amounts, platform fees and rental income are separately identifiable; our bookkeeping services handle this for short-stay operators.
• Separately review the income tax and GST treatment of the accommodation. The short stay levy does not itself determine whether the accommodation is subject to GST: ordinary residential rent is generally input taxed under s 40-35 of the GST Act 1999, while commercial residential accommodation can be treated differently. Our CPA accountants can review both positions together.

How Are Jointly Owned Properties Assessed?

This two-step mechanism (Land Tax Act 2005 (Vic) s 38) surprises couples who each own other property. The joint assessment does not exhaust the matter: your share of the jointly held land still counts towards your individual aggregated position, and the deduction is designed to prevent double taxation rather than to eliminate the individual-level effect. Where spouses hold an investment portfolio across joint and individual names, the interaction is worth reviewing before the next acquisition, not after.

What Should You Check Before the Next SRO Assessment?

Do not only check the tax calculation. Review the site value, ownership details, exemptions and landholdings shown on the assessment. Strict time limits apply to objections: an objection to the site value on a land tax assessment generally needs to be lodged within 2 months of receiving the assessment, and other land tax objections generally have a 60-day period.

• Log into My Land Tax on the SRO portal and confirm your landholdings, ownership details and usage status are correct.
• Check whether a specific exemption applies, such as the principal place of residence exemption, the qualifying PPR construction or renovation concession (which must be applied for), or the primary production land exemption.
• Check the site value against comparable land and diarise the 2-month objection window if it looks excessive.
• Confirm any required VRLT (15 February) or absentee owner (15 January) notifications have been made.
• Model future years' land tax, VRLT exposure and levies before committing to the next purchase.

Planning Before You Buy, Sell or Restructure

Review ownership structures before acquiring additional properties, not after. Restructuring existing property should not be undertaken solely for land tax purposes: a transfer can trigger land transfer duty and CGT, change trust surcharge and corporate grouping outcomes, and disturb financing and asset protection arrangements. A transfer can also break negative gearing grandfathering under the current federal settings, which we cover in how you can lose negative gearing grandfathering.

Our view is that a 2026 property review should connect structure, land tax, vacancy exposure and cash flow, not treat them as separate issues. That is where 3-way forecasting earns its keep: it integrates profit and loss, balance sheet and cash flow so you see the real-world impact of each tax change before it hits your accounts.

Key legislative references

The core provisions sit in the Land Tax Act 2005 (Vic):

Key Takeaways

Frequently Asked Questions