In short:
The Victorian Government has promised to progressively reverse its 2023 land tax changes over six years. The direct savings would primarily benefit investment property and other taxable land owners, while principal homes are already exempt.
Another Election Promise Lands
The Victorian Government has promised to progressively cut land tax if re-elected, with more than 250,000 property owners expected to eventually be removed from the tax system.
Premier Ben Carroll announced the government would reverse changes introduced in 2023 that lowered the general land tax-free threshold from $300,000 to $50,000.
Under the election commitment, the threshold would gradually return to $300,000, with affected property owners eventually saving up to $975 a year.
The full change would take six years, reaching the previous threshold in 2033/34.
Relief Starts Next Year
The first increase would come in 2027/28, when the threshold would rise by $25,000.
The government estimates this would remove 33,000 people from the land tax system and save them $500 that year.
Another $25,000 increase would follow in 2028/29, removing an estimated further 27,000 taxpayers, before further increases progressively restore the $300,000 threshold.
The government says the policy is designed to provide ongoing cost-of-living relief as households face higher interest rates and other financial pressures.
Property Owners To Benefit
The impact would vary considerably depending on what property a Victorian owns.
A person’s principal place of residence is generally exempt from land tax, meaning homeowners who only own the property they live in would typically receive no direct saving.
The changes would instead directly benefit owners of taxable land, including investment properties, holiday homes and some vacant land.
Landlords brought into the system by the 2023 threshold reduction could eventually have their land tax liability removed, depending on the taxable value of their holdings.
Tenants would receive no direct tax reduction, although landlords benefiting from the changes would face lower annual property costs.
Six-Year Reversal
The commitment would progressively unwind part of the government’s COVID Debt Repayment Plan, which lowered the general threshold from $300,000 to $50,000 from 2024.
The government estimates the changes would cost the state budget $230 million over five years.
It says the cost would be supported by $70 million in savings from consolidating the government vehicle fleet, more than $100 million from reducing public service executive positions and savings associated with delaying level crossing removals.
The staged rollout means some property owners would leave the land tax system from the first increase, while others would wait several years.
For those affected by the lower threshold introduced in 2023, the commitment would progressively restore the previous tax settings over the next six years.
