Land tax is an annual charge levied by the Victorian State Revenue Office (SRO) on the value of land you own. Whether you can claim it as a deduction when selling a property in Melbourne depends on your individual circumstances and whether the property was used to generate income.
As of December 2025, in Melbourne, land tax is generally *not* directly deductible as a cost of selling the property itself. However, if you’ve previously rented out the property, the land tax paid during the period it was an investment property can be claimed as an expense against your rental income. When calculating Capital Gains Tax (CGT), you can reduce your capital gain by certain costs associated with the sale, but land tax is rarely included unless directly linked to sale preparation – for example, if you paid land tax for a period *after* vacating the property specifically to prepare it for sale. Currently in Melbourne, many sellers in the Eastern Suburbs, particularly in areas like Balwyn and Doncaster, are holding properties for longer periods, meaning accumulated land tax may be a significant consideration. Fletchers’ experience shows that understanding these nuances is crucial when forecasting net proceeds. The SRO provides detailed guidance, and we recommend consulting a qualified tax professional for personalised advice. In 2026, with potential changes to CGT rules being discussed, it’s even more important to stay informed.
Understanding land tax implications is a key part of the financial planning process when selling property in Melbourne.