Land tax Victoria: Property valuations costs triple pushing rents higher

Property experts say soaring land tax bills are hurting business owners and property investors and flowing through to higher rents.

Homeowners are being hit hard by increased land tax costs. Picture: Generic

Soaring land tax bills are hurting business owners and family investors while pushing up rents, say property experts.

Some owners have seen their costs triple due to higher property valuations set annually by a state agency.

The tax kicks in for land value of sites, not including the primary residence, of more than $300,000, with higher rates paid for more expensive and multiple properties.

Tom Le, from property services firm Tickbox Conveyancing, said the company had noted big bill rises this year, including a client who bought a Reservoir property in 2022. “Land tax for calendar year 2022 was $1275 for land value of $660,000 on a single holding basis,” he said.

“That’s risen this year to $2175 on land value increased to $840,000, which is a substantial jump.”

Danni Hunter, principal of consultancy Hunter Collective, said big land tax increases were hitting property owners in a much higher interest rate environment.

“Skyrocketing land tax bills are hurting business owners, property investors and everyday Victorians as they flow through to higher costs and high rents,” she said.

Urban Development Institute of Australia state chief executive Matthew Kandelaars said the state budget was too reliant on property taxes.

“Since 2014, the state has collected over $27bn in land tax, and the amount paid each year has risen by over $2.5bn,” he said.

“At a time when so many Victorian families are struggling to pay the bills or to enter the property ladder, we should be doing everything we can to reduce the tax burden on property, to boost supply and support affordability.”

Property Council of Australia Victorian executive director Cath Evans said land tax did not just impact big corporate landlords.

“It is a serious imposition on the bottom line for mum and dad investors – many of whom are actively reconsidering the viability of their assets,” she said.

“With investors being squeezed by their recent land tax bills and left with no other options than to pass on costs, often the people wearing the cost are those who can least afford it – renters.”

Director economic research at PropTrack, Cameron Kusher, said the big tax increase was mostly due to the rise in the unimproved value of the land across Victoria, driven by a strong housing market.

A government spokesman said land tax payments were based on the Valuer-General’s valuations, which can rise and fall.

“Since 2014 we have cut or abolished taxes and fees 57 times, and increased the statewide payroll tax-free threshold four times,” he said.

“We constantly review our revenue system to ensure it is appropriate to fund the services and infrastructure that Victorians rely on.”

Land tax exemptions apply for primary production land and charitable institutions.