Buying commercial property in Victoria? How the new property tax affects your funding

For buyers, this affects more than tax planning. It changes how much cash you need at settlement, introduces a government loan that ranks ahead of your mortgage, and adds a future cost that lenders and valuers will increasingly take into account.

How the reform works

CIPT is an annual tax on the land value of commercial and industrial properties. It applies once a 10-year transition period has passed, and that period starts with a qualifying "entry transaction" on or after 1 July 2024.

The reform does not apply to a property automatically. A property enters the transition only if it has a qualifying commercial or industrial use and is part of a specific kind of transaction on or after 1 July 2024. Qualifying uses typically include shops, offices, warehouses, factories and vacant commercial or industrial land.

Generally, the purchaser in the entry transaction will pay land transfer duty on that transaction. Once the property has entered the reform, future qualifying transactions may be exempt from land transfer duty and landholder duty, subject to the rules applying to the particular transaction and provided the property retains a qualifying use.

What it costs, and when

CIPT generally applies at a flat 1% of the property's site (unimproved) value each year, provided the property keeps a qualifying use. A reduced rate of 0.5% applies to eligible build-to-rent properties.

Source: State Revenue Office Victoria; Treasury Corporation of Victoria.

The tax starts in the first calendar year after the 10-year transition ends. For example, a property that entered the reform on 1 July 2024 will first pay CIPT in the 2035 tax year.

CIPT is separate from land tax. Land tax may still apply during the transition, and once the 10 years end, an owner may have to pay both.

The transition loan: financing your final stamp duty bill

Paying stamp duty at the full rate is a major upfront cost for commercial buyers. To ease the switch, eligible buyers can finance the stamp duty on their entry transaction with a loan from the Treasury Corporation of Victoria (TCV). The key terms published by TCV are:

• Amount: up to the stamp duty payable, capped at $1.93 million.
• Term and repayments: 10 years, repaid in 10 equal annual instalments of principal and interest. There is no interest-only option and no redraw.
• Interest rate: fixed for the life of the loan. It is set at a base rate linked to government borrowing costs plus a risk margin that the Treasurer sets each year. The margin was 2.25% for 2024–25.
• Security: a first-ranking statutory charge on the property.
• Property limits: the sale price must be no more than $30 million, and the property must have a qualifying use.
• Credit test: total interest-bearing debt, including the transition loan, generally must not exceed 75% of the property's value. TCV also assesses the borrower's ability to repay.

There are also limits on who can apply. Self-managed super funds are excluded. Individuals can only apply if the property won't be used mainly for personal, household or residential investment purposes.

What this means for your funding

1. The transition loan ranks ahead of your mortgage

This is the most important point for borrowers and their lenders. TCV says the transition loan is registered on title and ranks ahead of all other encumbrances, so a purchase lender's mortgage sits behind a government charge for up to 10 years. TCV includes the transition loan when assessing its own 75% LVR requirement. A purchase lender will also need to consider the first-ranking statutory charge, the borrower's overall indebtedness and the annual transition-loan repayments when assessing the transaction.

2. Your lender matters

To be eligible for the transition loan, you need finance approval for the purchase from an Approved Lender: a bank regulated by APRA (excluding restricted ADIs), or another lender with an Australian Credit Licence that APRA lists as a registered financial corporation. TCV also asks for all the documents you gave your lender to get that approval. If you plan to use the transition loan, check that your purchase lender qualifies before you sign the contract.

3. Plan the cash at settlement either way

If you pay the stamp duty upfront, you need that cash or equity on the day. If you use the transition loan, you take on a fixed annual repayment for a decade. Neither option is right for everyone. The best choice depends on your cash flow, your other debt and how long you plan to hold the property.

4. Build the future tax into your numbers

A property that has entered the reform can be sold later without stamp duty, which may make it more attractive to future buyers. However, once the transition period ends, a property that remains within the qualifying-use rules may become liable for CIPT in addition to ordinary Victorian land tax. Investors should factor this into long-term yield calculations, and owner-occupiers into their occupancy costs. Lease terms that determine whether these costs can be passed on to tenants matter more than before.

5. Check the property's status before you buy

Property clearance certificates can show the property's AVPCC classification, the date it became or will become subject to CIPT, and relevant change-of-use information. Your conveyancer should check the certificate early, because it affects the duty you'll pay, your eligibility for the transition loan and the property's future tax.

6. Watch mixed-use and regional properties

For a qualifying dutiable transaction to be an entry transaction, land transfer duty must generally be chargeable on 50% or more of the property's unencumbered value. The 50% regional commercial and industrial property duty concession can still apply and is disregarded when applying this entry threshold. Mixed-use properties and transactions involving partial interests can be more complex, so professional advice should be obtained before committing to a transaction.

Where to learn more

The State Revenue Office is running a CIPT webinar on 8 October 2026, and its website has detailed guidance. The Treasury Corporation of Victoria publishes the full transition loan terms and eligibility rules.

The Funding Door view

Victoria's tax reform changes the cost of buying commercial property, but it doesn't change the basics of good funding: a clear view of total debt, realistic servicing and a structure that suits the asset and the borrower. Any lender assessing a purchase will look at the full picture, including stamp duty, the transition loan and future tax costs.