Victoria has introduced a new tax system for commercial and industrial properties that could potentially impact your commercial or industrial property. Starting from 1 July 2024, the traditional stamp duty on these properties is being replaced by an annual Commercial and Industrial Property Tax (CIPT).

Here’s a simple breakdown of what this could mean if you own a commercial or industrial property.

Key Changes

Annual Property Tax

Instead of paying a large, one-time stamp duty when you buy commercial or industrial property, you’ll now pay a 1% annual tax on the property’s land value. This tax starts 10 years after the property is first sold under this new system.

Flexible Payment Options

For any commercial or industrial property bought after 1 July 2024, you have two options:

  • Pay the stamp duty upfront: This is a one-time payment.
  • Take a government loan: Spread the stamp duty payment over 10 years with a loan from the government.

This gives you flexibility in managing your finances, especially if you prefer not to make a large upfront payment.

Property Exclusions

The new tax doesn’t apply to properties used mainly for residential purposes, farming, community services, or sports. Mixed-use properties (e.g., a shop with a residence above) will be taxed based on their primary use. So, if your property is primarily commercial, it will fall under this new tax regime.

No More Stamp Duty After the First Sale

Once a property is in the new system, future sales won’t require stamp duty. This simplifies the process and provides a more predictable tax environment for businesses, encouraging long-term investments in commercial properties.

Frequently Asked Questions

Q: Will my existing commercial property be affected by this new tax?

A: If your commercial property was purchased before 1 July 2024, the new tax does not apply. The new CIPT only affects properties transacted on or after this date.

Q: What happens if my property is mixed-use?

A: Mixed-use properties will be taxed based on their primary use. If the main use of your property is commercial, it will fall under the new tax regime.

Q: Can I still pay stamp duty upfront?

A: Yes, for properties bought after 1 July 2024, you can choose to pay the stamp duty upfront or take a government loan to spread the payment over 10 years.

Q: Will this new tax affect the value of my property?

A: The new tax could potentially influence property values as it changes the cost structure of owning commercial and industrial properties. It’s advisable to consult with your accountant for a comprehensive financial impact assessment.

Q: How does the government loan option work?

A: The government loan allows you to spread the payment of stamp duty over 10 years, easing the immediate financial burden of property purchase. Interest will be applied to this loan, similar to a standard loan.

How WJM Lawyers Can Help With Commercial and Industrial Property Tax

At WJM Lawyers, we understand that navigating these changes can be challenging. That’s why our Property and Commercial Law team is here to help you understand the legal implications and ensure your property transactions comply with the new regulations.

Our Services Include:

  • Legal Advice: Explaining how this new tax affects your property and business.
  • Transaction Support: Assisting with buying or selling properties under the new system.
  • Working with Your Accountant: Collaborating with your accountant to integrate these changes into your financial planning.

Contact Us

Stay ahead with WJM Lawyers. Get in touch with our expert team today to discuss how we can support your business through these changes.