Can a Seller Pass Their Land Tax Liability Onto a Buyer in Victoria?
Land tax in Victoria is assessed to the owner. Victorian law restricts passing it to a buyer below a $10m purchase price — what applies and when.
Can a seller pass their land tax liability onto a buyer in Victoria?
Land tax in Victoria is a tax on land ownership — it’s assessed against whoever owns the taxable land, not against whoever happens to be buying or selling it in a given year. That part is settled.
The narrower question this article was written to answer is whether, and within what limits, a Victorian contract of sale can require a buyer to reimburse the seller for that liability. As at July 2026: for most residential sales, no. A vendor is prohibited from apportioning or passing on land tax — including Vacant Residential Land Tax, interest and penalty tax — to a purchaser under a Victorian contract of sale entered into on or after 1 January 2024, where the purchase price is less than $10 million (a threshold that’s indexed annually from 1 January 2025). Above that price point, the prohibition doesn’t apply.
That’s a restriction Victorian law places on what a contract can require — not just a matter of drafting convention — so a special condition asking a buyer to cover the seller’s land tax on a typical residential purchase runs into a rule that says it can’t, at least below the indexed price threshold. Get the specific wording checked by a conveyancer or property lawyer, and confirm the current position with SRO Victoria directly, before you sign or agree to any special condition that touches land tax — the threshold moves each year and the underlying contract terms still matter. [REVIEW: to be reviewed by a registered tax agent — arranged by
The rest of this article covers who land tax actually falls on, how large a Victorian liability can get, and the practical questions worth raising before settlement.
Who is actually liable for land tax in Victoria?
Land tax is an annual state tax charged on the total taxable value of land you own in Victoria, administered by the State Revenue Office (SRO) Victoria. As at July 2026, the general threshold for individuals is $50,000 of total taxable Victorian land value — nothing is payable below that, and a $500 minimum assessment applies right at $50,000. A lower $25,000 threshold applies for the trust surcharge. These settings apply for the 2024–2033 land tax years, which covers 2026.
Because the threshold is calculated on the total taxable value of everything you own in the state, it isn’t assessed property-by-property. If you already hold other taxable land in Victoria, a new purchase is added to what you already have, against the one threshold — not treated as a stand-alone parcel.
A genuine principal place of residence is generally exempt from land tax (the exact mechanics differ by state, but the exemption itself is a near-universal rule across Australian land tax regimes). This article is about investment and other non-exempt property — the kind most investors hold for rental income or growth, where that exemption doesn’t apply.
Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.
What else can push up a Victorian land tax bill?
Two extra layers sit on top of the general threshold, and both matter to the “who ends up paying” conversation because they can turn a modest bill into a much larger one.
| Layer | What it is | Current settings (as at July 2026) |
|---|---|---|
| COVID-19 debt temporary surcharge | A flat add-on built into the general land tax scale | $500 flat for taxable value $50,000–under $100,000; $975 flat for $100,000–under $300,000 (or under $250,000 for trusts); $975 flat plus an extra 0.10 percentage points on the rate for $300,000+ (or $250,000+ for trusts) |
| Vacant Residential Land Tax (VRLT) | A separate annual tax on residential land left vacant for more than 6 months in the preceding calendar year, assessed on Capital Improved Value (CIV — broadly, the value of the land plus improvements), with no tax-free threshold | 1% of CIV in the first year liable, 2% in the second consecutive year, 3% in the third and later consecutive years |
Both layers are legislated to run on their current settings until at least the 2033 land tax year, but SRO Victoria’s own rates pages note these settings move with state budgets — always check the current figures before relying on them for a real transaction. VRLT has widened its reach more than once since 2023, most recently extending to certain long-undeveloped metropolitan Melbourne land from 1 January 2026, so a property that wasn’t caught last year could be caught this year.
How is this different from a normal settlement adjustment?
Contracts of sale commonly split ongoing property costs — council rates and water charges are the everyday example — between seller and buyer as at the settlement date (the date ownership formally changes hands), so each party only wears the cost for the days they actually owned the property. Land tax doesn’t work the same way, at least not below the $10 million (indexed) purchase-price threshold covered above.
That’s the key difference flagged at the top of this article: council rates and water are ordinary adjustments a contract can allocate however it’s drafted, while land tax below the threshold is a cost Victorian law says the vendor can’t shift onto the buyer at all, whatever a special condition tries to say. How a private reimbursement clause would interact with SRO Victoria’s own assessment — the SRO can still recover an unpaid land tax liability from a vendor directly — is a question for your conveyancer or property lawyer on the specific contract, not something this article settles in general terms. Confirm the current threshold and the wording of any proposed condition before you write, or accept, a special condition (an extra contract term added on top of the standard terms) that touches land tax.
What to check before you sign
- Ask your conveyancer or solicitor whether the contract of sale includes a special condition adjusting or reimbursing land tax, and — if the purchase price is below the current indexed threshold (around $10 million as at July 2026) — whether that condition can lawfully be enforced at all.
- Check the current land tax position for the specific property directly with SRO Victoria, rather than assuming a figure from a previous year still applies.
- If you already hold other taxable land in Victoria, remember your new purchase is assessed together with what you already own, against the one threshold.
- If the property has sat vacant, ask specifically about Vacant Residential Land Tax exposure — it’s a separate liability from ordinary land tax, has no tax-free threshold, and its scope has recently widened.
None of this replaces advice on your specific contract. Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.
Where land tax fits in your wider investment costs
Land tax is one of several recurring costs that sit between an investment property’s rental income and its bottom line, alongside things like property management fees, insurance and loan interest. If you’re weighing up how those ongoing costs stack up against rent, our guide to cash flow positive vs negatively geared property walks through that trade-off in more depth.
And if you’re still building the basics of how property investment works before getting into state-tax detail like this, our guide to what property investment in Australia actually involves is a good place to start.
