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Has your land tax skyrocketed? How to object to your land tax assessment

Mark McKinley & Eleanor Athanasiou

Land tax is a state-based tax levied on the land value component of each property you own. This value is traditionally based on the site value determined by council valuers. To determine your land tax liability, the State Revenue Office (SRO) will consider the properties you own and whether any exemptions apply to you as at 31 December each year.

Background: The problem

In Victoria, a land tax liability arises when the total taxable value of your land holdings exceeds $250,000. The rate of land tax charged depends on the value of your land. There are also surcharge rates that are charged on the land if it is held on trust, which generally results in higher land tax being payable up to a total taxable value of $3 million. An absentee, or foreign, owner surcharge of an additional 1.5% may also be charged depending on your circumstances.

Land tax rates have not been indexed or changed for a decade, but the prices of the underlying properties have generally risen substantially, so land tax has also increased.

What can you do to object?

If you disagree with your land tax assessment, you must act quickly as you only have 60 days from the date of issue of the assessment to object to it.

Importantly, you cannot object to your land tax assessment based on:

  1. the fact that the market value of your property is less now than what it was at the relevant valuation date;
  2. the percentage increase in value; or
  3. the taxable value of the land increasing.

You can only object on the grounds the site value on your land tax assessment is incorrect.

The current land tax year’s assessments are determined based on the site value of the property at 1 January 2018. From 2020 this will move to an annual valuation cycle by the Victorian Valuer General, rather than relying on valuations which were traditionally prepared by the relevant council every two years.

Understanding how your land is valued is therefore crucial in objecting to your land tax assessment. Your valuation has been determined by considering property sales in the area (amongst other considerations). So before objecting you must find sales data that supports your objection. A valuer will be able to establish the site value, and you will need to provide their findings to the SRO if your application is to have any chance of success.

Properties which are on the Victorian Heritage Register may also have other grounds to object to a high site value.

Different types of objections

You may also find that your assessment:

  1. incorrectly identifies the land you own;
  2. applies the incorrect rate of tax; and/or
  3. fails to consider any exemptions that may be relevant to your land and its use.

It is important to determine whether you are objecting to the assessment of your site value, or on the basis that the SRO’s assessment is factually incorrect (e.g. because the assessment includes land you no longer own). Objections can be prepared electronically using the smart form available on the SRO website.

Importantly, remember that if you are objecting because you do not agree with the assessment of the site value, you must obtain sales evidence or a valuation from a valuer to demonstrate that the site value on your assessment is incorrect.

Contact us

Russell Kennedy’s Property and Development team has the expertise and knowledge required to assist you with any land tax query you may have. Please contact Eleanor Athanasiou or Mark McKinley for more information on how we can assist.

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