Recent Changes to State Taxes
What property owners need to know in 2026.
Victoria’s State Taxation Further Amendment Act 2025 received Royal Assent on 25
November 2025, and the changes it introduces are significant for property owners,
developers, and commercial investors alike.
Here’s a plain-language breakdown of what’s changed and what to watch.
Congestion Levy
Off-street parking just got more expensive. From 1 January 2026:
- Category 1 levy: up from $1,750 to $3,030 per leviable parking space
- Category 2 levy: up from $1,240 to $2,150 per leviable parking space
- The Category 2 area now includes Burnley, Cremorne, South Yarra, Windsor and
parts of Richmond, Abbotsford and Prahran - From 2027, rates will be indexed to CPI annually
Some relief is available: shopping centres and retailers in Category 2 may qualify for a 50%
levy reduction for conditional free customer parking, and government and boarding schools
providing free parking are exempt.
Vacant Residential Land Tax (VRLT)
If you own a holiday home, investment property, or long-term vacant dwelling, it is worth
reassessing your VRLT exposure. Key updates include:
- A new exemption for residences under construction or renovation, or uninhabitable
properties, effective for the 2026 land tax year - Residential land in Dinner Plain is now excluded from VRLT, retrospective to 1
January 2025 - The VRLT notification deadline has shifted from 15 January to 15 February each year
Land Tax
A new exemption has been introduced for land valued under $300,000 that includes a
non-permanent structure used as the owner’s primary residence, for situations where the
standard principal place of residence exemption does not apply. Eligibility criteria apply,
broadly similar to those of the existing PPR exemption.
Foreign purchasers and absentee owners should also note additional amendments to
surcharges and related exemptions.
Commercial and Industrial Property Tax (CIPT)
The Act clarifies the rules for when a commercial or industrial property enters the CIPT
reform scheme, which replaced upfront stamp duty for qualifying transactions from 1 July
2024.
Importantly: for a direct transfer to trigger entry into the CIPT scheme, duty must be payable
on 50% or more of the dutiable value of the property. This applies retrospectively to all
transactions from 1 July 2024.
A new exemption has also been introduced for transfers from a custodian to a trustee of a
trust, effective from the date of Royal Assent.
What to Consider Now
- Review your exposure to VRLT, particularly for holiday homes and vacant properties
- Understand CIPT implications for any commercial transactions
- Model the financial impact of the congestion levy increase on any parking assets
- Reassess ownership structures that may trigger surcharge liabilities
Our Property & Development team can help you work through what these changes
mean for your specific circumstances.
Reach out to our team to discuss.
