Australia—the land of opportunity. It’s a place where owning a home is the dream for many, but owning multiple homes, well, that’s a pathway to wealth, financial security and a savvy lifestyle (perhaps even a handy tax break, too). However, with the latest Victorian Property Tax & Land Tax changes, people are now asking: Is this a setback or an opportunity?
As an accountant, a big part of my job is helping people optimise tax outcomes—or, as Kerry Packer once famously put it: “I am minimising my tax, and if anybody in this country doesn’t minimise their tax, they want their heads read.”
Needless to say, tax increases are never welcome news.
When it comes to property, these tax changes (or the introduction of new levies and surcharges—if that makes them easier to swallow) often push owners to reassess their financial plans. Some may feel pressure to sell because the economics of their investment have shifted, while others worry their dream of owning an investment property or holiday home is slipping away.
However, this doesn’t mean that owning additional property in Victoria is no longer a worthwhile investment; rather, with proper knowledge and planning, it can still be viable.
Whether you’re a current property owner or planning to buy, being informed before jumping the gun can help you avoid unexpected costs down the track. The best place to start is by understanding precisely what these property tax changes mean.
What Are the New Victorian Property Tax and Land Tax Changes?
The Victorian Government has introduced several changes aimed at increasing revenue from property owners. For simplicity, let’s cover the four key updates, which are:
- Short Stay Levy: A 7.5% tax on short-term rental accommodation (e.g., Airbnb and Stayz), applying from 1 January 2025 to stays of less than 28 days. This will likely be passed on to renters (at least in part), increasing holiday costs. It may also reduce occupancy rates for short-term rental owners.
- General Land Tax Updates: Land tax rates and thresholds are increasing, leading to higher holding costs for property owners, especially for properties owned through trusts.
- Windfall Gains Tax: This tax applies to landowners who benefit from rezoning, where the value of their land increases by more than $100,000 due to a zoning change. The tax rate is either 50% or 62.5%, depending on the circumstances.
- Vacant Residential Land Tax (VRLT) Expansion: Previously, VRLT only applied to vacant properties in inner Melbourne, but from 1 January 2025, it applies statewide. The tax applies to properties left unoccupied for more than six months per year. Exemptions exist, so it’s important to understand whether they apply to your property.
How Will These Changes Affect Property Owners and Buyers?
So, where do we stand from a financial perspective (hence the name—‘Finspective’)? If you currently have or are looking to invest in property, own a holiday home, or purchase additional land, these new property taxes mean more careful planning is required.
Understanding how these taxes could impact your overall cash flow and potential returns is essential. Some investors may find that what was once a profitable venture is now less viable. Others may simply need to adjust their financial strategy—factoring in additional tax obligations and structuring their ownership more efficiently.
The key takeaway? Don’t rush into selling or shelving your property dreams just yet.
There is, however, a silver lining to all this. If you’re looking to be active in the market, you may be in luck. When property taxes such as these come into play, you’ll likely see two things happen:
- More properties on the market – Investors who find their holdings less profitable may decide to sell, leading to a greater selection of properties available.
- Less competition from other buyers – Higher taxes can deter potential investors and developers, giving first-time buyers and upgraders more breathing room to negotiate.
Put these two factors together, and you could be looking at a buyer’s market. If you’ve been waiting for the right moment to enter the property game or upgrade your home, this could be your window of opportunity. Lower property prices and better negotiation leverage may now work in your favour. Savvy buyers who understand these shifts and plan accordingly can turn what seems like a setback for some into a strategic advantage for themselves.
Higher property taxes can create a buyer’s market by increasing property listings and reducing competition from investors.
The Dream Isn’t Over Just Yet
Just to be clear, this post isn’t intended to scare anyone out of their plans. Owning property will continue to be a cornerstone of financial security and lifestyle for Australians. While the new Victorian Land Tax and Property Tax changes may make things more complex, they don’t have to be deal-breakers, and in fact may present as a fantastic buying opportunity to you.
Take your time to plan carefully, build your knowledge, and seek the right financial advice. Done right, you can still achieve your property goals while minimising unexpected costs.
Yes, property ownership may now require more strategy than before, but it will remain one of the most rewarding ways to build your financial future.
Let’s keep the dream alive!
If you see yourself owning additional land or property, whether it be for investment or personal use, you may want to check out our Tax Planning & Advice page for more details. Alternatively, if your ready to secure your property, jump onto our Lending page were a broker can get you started.
Any advice on this site is general nature only and has not been tailored to your personal objectives, financial situation and needs. Please seek personal advice prior to acting on this information. Any advice on this website has been prepared without taking account of your objectives, financial situation or needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.
