Treasurer's 2026–27 budget keeps the property-heavy revenue mix; investors and larger landholders wear the biggest change.
The Victorian 2026–27 state budget, handed down by Treasurer Jaclyn Symes, extended the temporary COVID debt levy on land tax through to June 2033 and lifted the tax-free land value threshold from $50,000 to $75,000. The measures are the largest revenue changes in a budget that otherwise leaned on cost restraint to bring the operating balance back toward surplus.
Victoria's land tax already had the broadest base and the most brackets in the country. From 1 January 2027:
Owner-occupied homes remain exempt. The change is squarely a tax on investors and, indirectly, on renters.
Treasury projects the package raises about $2.1 billion over the four-year forward estimates. On its own numbers, roughly 380,000 landholders will pay more, 65,000 will pay less, and the remaining ~1.1 million residential owner-occupiers are unaffected.
The heaviest impact falls on investors with multiple Melbourne properties. A landlord with three inner-suburban rentals on a combined site value of $2.4m will pay roughly $3,200 more per year in land tax from 2027 than they did in 2025. Commercial landlords, holiday-home owners, and trusts holding land are also captured.
The Real Estate Institute of Victoria was quick to warn that extended land-tax settings would accelerate the "investor exit" already visible in the data. ABS lending figures show Victorian investor loan approvals down 12% year-on-year, while every other mainland state is up. Land Use Victoria transfer data suggests roughly 30,000 net rental properties have left the Victorian market since 2023.
Whether that flows through to rents is contested. Grattan Institute analysis argues most of the tax is capitalised into land values rather than rents, particularly in a low-vacancy market where landlords already charge what tenants can bear. The REIV and Property Council counter that at the margin, higher holding costs plus tighter supply push rents higher for longer.
Premier Jacinta Allan defended the package as "asking those with the broadest shoulders to help pay down the debt from a once-in-a-century pandemic." Opposition leader Brad Battin called it "the eighth new or increased tax" from Labor since 2020 and pledged to repeal the levy if elected in November 2026.
Net debt is projected to reach $198 billion by 2028, or about 25% of gross state product — the highest ratio in the federation. Ratings agencies S&P and Moody's both kept Victoria's credit rating unchanged after the budget, noting the extended levy as credit-positive.
In the short run: more properties listed for sale as smaller investors trim portfolios, some downward pressure on prices in the sub-$900k investor-grade segment, and continued tightness in the rental market. In the longer run: the state is signalling that property will continue to carry a disproportionate share of the revenue task, which will factor into every new build-to-rent, apartment and greenfield decision made in the city.