Land tax has always been a consideration for property investors in Victoria, but recent changes to thresholds and rates are making a bigger impact than ever. With adjustments introduced last year, many investors are now re-evaluating their portfolios. Some are selling, while others are restructuring their holdings. But what does this mean for Melbourne’s property market in 2025?
How Land Tax is Affecting Melbourne Properties
The Victorian Government reduced the minimum threshold for land tax in 2024, meaning more property owners are now liable. Many apartments that were previously exempt are now attracting land tax. As a result, a wave of investors has moved to sell, increasing supply in the apartment market.
However, not all properties are being formally listed. Agents are holding back some listings to avoid overwhelming the market. This means that while there are plenty of investment apartments for sale, buyers may need to dig deeper to find them. Some investors who attempted to sell but couldn’t achieve their desired price have chosen to return their properties to the rental market instead.
How Existing and New Investors Are Reacting
For long-term investors, these changes have presented a challenge. Some have chosen to exit the market entirely, while others are seeking advice on how to minimise their exposure. One strategy being explored is restructuring ownership to distribute landholdings across multiple entities, which can influence tax rates. While Parker Buyer Advocates is not a tax advisory service, we strongly encourage investors to seek guidance from accountants and legal professionals to understand their options.
On the other hand, new investors are entering the market with full awareness of the land tax situation. They are factoring it into their yield calculations from the outset. While land tax remains an added expense, those who do their research and adjust their expectations can still find viable investment opportunities in Melbourne’s evolving market.
The Market Will Adjust
Like any tax change, the market is in a period of adjustment. Some investors are leaving, while new ones step in. Buyers are adapting, and professionals are helping them find ways to manage costs effectively. Although this transition period is creating some uncertainty, the Melbourne property market remains strong.
For those considering investment in 2025, understanding land tax is now a key part of due diligence. Whether buying a single apartment or a diversified portfolio, smart investors are working with professionals to navigate the changes. If you’re looking for guidance on your next property purchase, a buyer’s advocate can help you find the right opportunities amid the shifting landscape.
For more details on current land tax rates and changes, visit the State Revenue Office Victoria and their official updates.
If you’re looking to invest in Melbourne’s property market, now is the time to get expert advice and explore the opportunities available. The market is adjusting, and so can you.
Book a call with me now to help you get started with exploring investment possibilities.
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