Land tax is a state based tax that is levied on the value of land that you own. Each state has its own legislation, the following is specific to Victoria.
If you own land in Victoria individually or as a company and the combined taxable value of all your landholdings exceeds $250,000, you should receive a land tax assessment unless the land is exempt. For trusts, this threshold is only $25,000.
The value used by the State Revenue Office is the same as the council rates valuation for the unimproved value of the property.
Land owned jointly.
Where you own land jointly with others, your proportional share of the landholdings will be counted towards the thresholds stated above.
Joint holdings complicate the land tax assessment process and you may receive more that one land tax assessment, one for the joint holdings and then a separate one for your individual holdings.
For example, if you are connected to two properties:
Property one – is owned 50% by you and 50% by your partner
Property two – is owned 100% by you
Then you will receive two land tax assessments:
Assessment one – is an assessment for the joint holdings of you and your partner. The tax will be calculated on property one only
Assessment two – is an assessment for all your property holdings which is property two and half of property one. Your tax will be calculated 100% of the value of property two and 50% of the value of property one. You will however receive a credit for your portion of the tax paid on assessment one.
This can get very complicated where there are numerous property holdings, so please always feel free to send us a copy of your assessment for review.
Check your Land Tax Statement
It is important to check that your landholdings are correctly recorded with the State Revenue Office. At the time of purchase this should be done, however the onus is on the taxpayer and circumstances do change over time. Things that need checking include:
- All the land you own is included.
- Exemptions are appropriately applied. The main exemptions are for your principal place of residence and primary production land.
- The land tax assessments are in the correct name. This is particularly relevant where a company or individual holds land as trustee of a trust. As there is a differential rate for trusts you must ensure that the land tax assessment notes that the land is held for the trust.
Land tax assessments are sent annually, generally between late January and late May. The annual assessment is based on your land holdings at the previous 31st December.
Vacant Residential Land Tax
To further complicate matters there is also a Vacant Residential Land Tax which applies to homes in inner and middle Melbourne that are vacant for more than six months. This is on top of the standard land tax discussed above.
If you have any queries please contact Patrick Rowan & Associates tel: 5221 7655
This is is a general summary only. For more information, please speak with your Accountant.