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Buying a Victorian warehouse? Put commercial property tax in the numbers
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Overview
Before you make an offer on a Victorian warehouse, check when its annual property tax could start. That date and the land value can change how much rent you keep.
Find the entry date before you model the yield
Two warehouses on the same street can come with different tax timelines. Under Victoria’s commercial and industrial property tax (CIPT) reform, a qualifying property enters the system through a relevant transaction on or after 1 July 2024. An earlier sale may already have started its ten-year transition. Your own settlement date won’t necessarily tell you when the annual bill starts.
Ask your conveyancer for the property clearance certificate and check its qualifying use, entry date and CIPT status. Once the transition ends, the standard annual rate is 1% of the land’s site value while the property continues to qualify. Site value excludes improvements. Eligible build-to-rent properties have a different rate.
Take a warehouse bought for $2.4 million with a site value of $900,000. At the standard rate, that site value would mean $9,000 a year once CIPT applies. Allow for changes in land value over the holding period. If your plan assumes you can pass an outgoing on to a tenant, have the lease and applicable leasing law checked before counting it as a recovery.
Separate the purchase costs from the holding costs
Duty can still be payable on the transaction that brings a property into the reform. Eligible purchasers may apply for a Treasury Corporation of Victoria transition loan to finance that duty. A loan adds repayments to your forecast. Later qualifying transfers can receive duty relief under the reform.
