What Investors & Developers Need to Know About Australia’s New Property Taxes
Australia has had a major increase in property-related taxes and proposed reforms over the last 2–3 years, especially in Victoria and New South Wales. The changes are affecting investors, developers, and buyers — and the pressure is only growing.
1. Higher Land Tax — Especially Victoria
Victoria significantly increased land tax following COVID-era debt measures. The state is now considered Australia’s highest property-taxed jurisdiction relative to its economy. Key changes include:
Lower Tax-Free Thresholds
Investors reach taxable thresholds sooner, pulling more properties into higher land tax brackets.
Additional Fixed Charges
New fixed charges apply to investment properties, adding to the base land tax cost regardless of land value.
Absentee Owner Surcharge
Increased surcharges for foreign and absentee owners, raising holding costs significantly for offshore investors.
Developer Holding Costs
Higher ongoing costs for undeveloped land are squeezing feasibility margins and slowing land banking.
2. Foreign Buyer Taxes Increased
Foreign buyers face a compounding stack of additional imposts at both state and federal levels:
- Extra stamp duty on purchase
- Additional annual land tax surcharges
- Vacancy taxes if homes remain empty
+8%
Victoria
Foreign purchaser additional duty on residential property purchases, on top of standard stamp duty.
Annual
NSW
Foreign owner surcharge land tax applies annually on residential land in New South Wales.
3. Proposed Federal Negative Gearing & CGT Changes
The Albanese Government has proposed major tax reforms targeting property investors:
- Restricting negative gearing mainly to new homes — existing property losses would no longer offset other income
- Reducing or changing the 50% capital gains tax discount currently available after 12 months of ownership
- Tightening trust taxation rules used by many investment structures
If Implemented:
- • Existing properties may become less attractive for investors
- • Developers and new-build projects could benefit more
- • Long-term capital growth strategies may need significant restructuring
These reforms are intended to improve housing affordability and push capital toward new construction. Politics will determine the final shape, but planning ahead is essential.
4. NSW Land Tax Threshold Freeze
New South Wales froze land tax thresholds, creating a stealth tax increase for investors:
- More investors gradually fall into higher land tax brackets as land values rise
- Even without purchasing additional property, investors pay more tax over time
- The real burden compounds annually as the gap between frozen thresholds and rising values widens
5. Commercial & Industrial Property Tax Reform (Victoria — CIPT)
Victoria has begun transitioning commercial and industrial property away from traditional stamp duty toward an annual property tax system called CIPT (Commercial and Industrial Property Tax).
This is a major long-term structural change. When a commercial or industrial property is sold, it transitions to the CIPT system. The annual tax replaces stamp duty on future transactions for that property — meaning lower upfront transaction costs but higher ongoing annual costs. For long-term hold strategies, this changes the entire investment calculus.
6. Vacancy / “Ghost House” Taxes
Foreign owners who leave properties vacant may face significant penalties:
- Annual vacancy fees applied by the ATO
- Large penalties for non-disclosure of vacancy status
- Increased ATO enforcement activity targeting non-compliant owners
Current Industry Sentiment
Developers and investors are increasingly vocal that the cumulative tax burden is unsustainable. The core tension:
Industry Concerns
- • Property taxes are now too high
- • Feasibility margins are getting squeezed
- • Holding undeveloped land is expensive
- • Development supply may slow further
Government Goals
- • Increase housing affordability
- • Push investors toward new construction
- • Raise revenue from property wealth
- • Discourage land banking & vacant homes
The Gambit Angle — Biggest Impacts for Developers & Investors
- • Increased land holding costs — time on site is now a taxed liability, not a neutral position
- • Reduced feasibility margins — every cost layer needs to be stress-tested against worst-case tax scenarios
- • More importance on fast project turnaround — speed to completion is now a tax-efficiency strategy
- • Stronger focus on new builds — development sites and new construction retain more tax advantages than passive holding of existing stock
Understanding the full tax picture before acquiring, holding, or developing is no longer optional — it’s the difference between a viable and an unviable deal.
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