Understanding Land Tax When Buying New Property in Melbourne in 2025
Purchasing a brand-new home or apartment in Melbourne in 2025 comes with modern finishes, better energy ratings and the potential for a more balanced market. Before you sign on the dotted line, it’s crucial to factor in land tax obligations so there are no surprises for your investment portfolio.
Key Land Tax Considerations
1. Lower Thresholds Mean More Properties Pay
Under Victoria’s COVID debt-repayment scheme the tax-free land-tax threshold has been cut to $50,000 for individuals and $25,000 for trusts. As a result, many more owners will exceed the threshold and incur an annual land tax bill.
2. Vacant Residential Land Tax (VRLT) Applies Statewide
From 2025 onwards, any residential land left vacant for more than six months will attract VRLT at 1% of the capital improved value (CIV) in the first year, increasing to 3% by year three of vacancy.
Tip: You can avoid VRLT by leasing or occupying the home promptly. New builds that remain unsold are exempt for up to three years, and properties under construction do not pay VRLT until they’re complete.
3. Off-the-Plan Perks
- Exempt from VRLT for two years while under construction
- Opportunity to personalise finishes
- Lower ongoing maintenance and builder warranties
4. Investor Impacts
- Land tax is calculated on the land’s site value, not total purchase price
- Trust-held properties pay more due to the lower $25,000 threshold
- Non-resident owners face an additional 4% land tax surcharge
5. Other Levies to Budget For
- Short-stay levy (7.5%) on Airbnb-style rentals let for over 90 days
- Emergency Services and Volunteers Fund levy doubles from July 2025
Why Buying New Still Makes Sense
Despite higher land-tax exposure, new properties offer compelling advantages:
Discover the #1 tax secret wealthy Australian property investors use to grow their portfolios faster — even in a high interest rate environment.
- Learn how to turn wear and tear into wealth
- See real examples of $15,000+ first-year deductions
- Understand how to structure your purchases for maximum after-tax ROI
Download Your Free Wealth Building Guide
This ebook reveals how to legally slash your tax bill while building long-term wealth through property. Learn the strategies savvy investors use to gain an edge — even before settlement.
- Maximise tax deductions and improve cash flow
- Understand Division 40 vs 43 and how to claim both
- Position yourself to reinvest and scale faster
- Forecast growth of around 1% gives you negotiation power
- Modern apartments and houses in growth corridors often come with developer incentives
- Expected interest-rate cuts mid-2025 could supercharge capital gains by 2026
Minimise your risks by ensuring the property is tenanted, reviewing the site value before you buy, and seeking specialist advice.
Further Resources
For a land tax calculator and detailed information, head to the State Revenue Office Victoria. If you’d like personalised guidance on new property investing in Melbourne, consider this online chat tool to explore your borrowing power and build a strategy.
