If you’ve bought or sold a commercial property in Victoria recently, you’ve probably noticed something odd on the contract: a clause about a tax that doesn’t get paid for another ten years. No, that’s not a typo. Since 1 July 2024, Victoria has been rewriting the rules for how commercial and industrial property is taxed, phasing out stamp duty in favour of an ongoing annual charge called the Commercial and Industrial Property Tax, or CIPT.
It’s a genuine shift in how buyers budget for purchases, how investors model long-term returns, and how advisers plan for clients who hold commercial premises. And because the tax doesn’t start until a decade after purchase, plenty of people are unknowingly buying into an obligation that won’t show up on their radar for years.
This guide breaks down how CIPT works, who it affects, and what it means for your next commercial property decision, without the legal jargon.
If you prefer watching to reading, watch our YouTube video on the Clear Tax channel.
What Is the Commercial and Industrial Property Tax (CIPT)?
CIPT is an annual tax on the land value of commercial and industrial properties in Victoria. It applies after a 10-year transition period, which begins with a relevant entry transaction on or after 1 July 2024.
In plain terms: instead of collecting one large stamp duty payment when a commercial property changes hands, the state will eventually collect a smaller amount every year, based on the value of the land alone, not the building on it.
Stamp duty is a one-off cost paid at settlement. CIPT is a recurring holding cost, similar in spirit to council rates or land tax, but specific to properties used for commercial or industrial purposes.
Why Victoria Introduced the New System
The thinking is fairly straightforward. Stamp duty is a high, lumpy cost that businesses have to find at the exact moment they’re already stretched: settlement day. That upfront bill can be enough to make an otherwise sensible relocation or expansion unaffordable.
Instead of paying a large amount upfront, businesses can spread the cost over several years. It takes pressure off cash flow, while the total amount of tax paid over time remains broadly comparable.
How the Transition From Stamp Duty Works
This is the part that trips people up. A commercial or industrial property doesn’t automatically fall under CIPT just because the reform exists. It enters the new system through what’s called an entry transaction — generally, the next time the property is sold on or after 1 July 2024.
Not every sale counts, though. For a transaction to qualify as an entry transaction, duty has to be payable on at least 50% of the property’s market value. If a concession or exemption pushes the payable duty below that threshold, the property doesn’t enter the scheme — worth flagging early with a conveyancer if the deal involves partial transfers, related-party sales, or duty concessions.
Assuming it does qualify: stamp duty is paid on the first purchase, but that’s the last time. The property then enters the tax reform scheme and a 10-year transition period begins. During those 10 years, there’s no CIPT to pay, and if the property sells again, no further stamp duty applies. Land can also enter the scheme through the consolidation of parcels, not just a straightforward sale or subdivision, relevant to developers assembling multiple titles.
Take a property that enters the scheme on 1 July 2024. Nothing changes for the next 10 years. Once that period has passed, the first CIPT assessment is issued for the 2035 calendar year, worked out on a calendar-year basis.
Example: A business buys its first commercial warehouse in March 2026 for $2.5 million. The land is valued at $900,000. Because this is the first purchase under the new system, stamp duty still applies — about $142,500. After that, there’s no CIPT to pay for 10 years. Based on today’s land value, the annual 1% tax would begin in the 2037 calendar year and come to about $9,000 a year.
Which Properties Are Affected
CIPT applies to land with a qualifying use — broadly, commercial and industrial property, usually identified by the Australian Valuation Property Classification Code (AVPCC) on the property’s latest valuation. This covers offices, warehouses, factories, retail premises and similar land. Residential property isn’t caught.
For mixed-use or not-yet-classified land, a 2026 amendment now lets the State Revenue Office make a provisional determination of qualifying use before the formal valuation classification is finalised. In practice, that means less waiting around in administrative limbo if your property’s use is ambiguous or changing.
Example: A 2024 office building changes hands in 2028. The buyer doesn’t pay stamp duty because the property is already in the CIPT system. The 10-year countdown isn’t reset, so the first CIPT payment is still due in 2035.
The Annual 1% Property Tax
Once CIPT starts, owners pay 1% of the property’s unimproved land value each year, as long as it continues to qualify as commercial or industrial land. Eligible build-to-rent properties are taxed at a lower rate of 0.5%.
The tax is based on site value — the land alone, not the buildings on it — so a warehouse and an office tower on similarly valued land pay similar CIPT, despite very different improved values.
CIPT is charged on top of land tax, not instead of it. Land tax can still apply during the 10-year transition period, before CIPT even kicks in, and once the transition ends an owner can be liable for both at once.
Example: Say you’re buying a $3 million industrial property with land worth $1.1 million. Instead of paying about $175,000 in stamp duty upfront, you’d pay around $11,000 a year under CIPT. It would take about 16 years for those annual payments to add up to the same amount, before accounting for any rise in land value. Whether CIPT works out cheaper depends entirely on how long you hold the property.
The Government Transition Loan
Buyers still have to pay stamp duty when a property first enters the scheme, so the upfront cost can be significant, especially for higher-value properties.
To help with this, eligible first purchasers can apply for a government transition loan to cover that final stamp duty bill. Eligibility is limited to Australian citizens, permanent residents, or Australian businesses buying as the first purchaser on or after 1 July 2024, with a purchase price up to $30 million and finance pre-approved by an authorised deposit-taking institution or other approved lender. Foreign purchasers don’t qualify, and anyone who doesn’t meet all these conditions pays stamp duty in full at settlement as usual.
The loan comes from the Treasury Corporation of Victoria on commercial terms. The rate is set at government borrowing costs plus an annual risk margin fixed by the Treasurer (2.25% for 2024-25). Because that margin is reviewed every year, check the current rate with TCV when you buy rather than relying on last year’s number. It’s meant to be paid off within 10 years, so the loan will be paid off before the annual CIPT kicks in.
Rather than paying one large stamp duty bill upfront, eligible buyers spread the repayments over several years, which can make it easier to keep cash available to run and grow the business.
One cap to watch: the loan itself is capped at $1.93 million in duties, even if the $30 million purchase price threshold isn’t reached. For larger transactions, this can mean the loan covers only part of the stamp duty bill, with the balance payable at settlement.
Exemptions and Special Situations
Not every transaction triggers CIPT. A few situations worth knowing:
- Charities and exempt entities. When a property changes hands through a transaction that’s exempt from stamp duty under the Duties Act 2000, it doesn’t enter the CIPT scheme. Land tax exemptions generally carry over; if a property is exempt from land tax, it’s generally exempt from CIPT as well.
- Subdivided land. Where a parent title within the CIPT scheme is subdivided, the resulting lots inherit the same entry date as the original title. This was confirmed by a June 2025 amendment specifically intended to close a loophole that might otherwise have reset the clock.
- Passing costs to tenants. Vendors generally can’t pass CIPT on to purchasers or hold retail and residential tenants responsible for it, though commercial tenants may have different arrangements depending on lease terms, worth checking before signing or renewing.
The Section 32 Disclosure Requirement
Since 1 July 2024, every Section 32 vendor’s statement in Victoria must disclose the property’s CIPT status, and this applies even to properties outside the commercial/industrial category if they could be affected by the reform. Getting this disclosure wrong isn’t a minor paperwork slip: it can let the purchaser terminate the contract at any point before settlement, and the vendor may also be committing an offence.
If you’re selling, this is one to get right with your conveyancer before the contract goes out. If you’re buying, the Section 32 (backed up by the SRO’s property clearance certificate) is where you’ll find out whether the property is already in the CIPT system or whether your purchase will be the entry transaction, which affects both how much stamp duty you’ll pay now and when the annual tax starts later.
Long-Term Financial Considerations
CIPT looks good on paper because you pay less upfront. The problem is it’s an annual charge that never goes away and is based on the land value, so if you hold the property for a long time, the total can end up costing more than stamp duty would have, especially as land values rise over the decades. It’s not automatically cheaper. It just depends on how long you keep the place and what happens to the land value. For SMSF trustees and anyone investing long-term, this changes the whole holding-cost calculation and means you really need to model it out beyond the usual 5–10-year timeframe. Our tax planning accountants can help you run those numbers before you commit to a purchase.
Common Misconceptions
“CIPT replaces land tax.” No. CIPT is separate from land tax. During the 10-year transition period, land tax may still apply. Once the transition ends, the owner may be liable for both taxes. However, if a property is exempt from land tax, it will generally also be exempt from CIPT.
“You start paying CIPT as soon as you buy the property.” Not how it works; there’s a 10-year transition period before the annual tax begins.
“Every commercial property is already in the CIPT system.” Not yet. A property only joins the scheme when it has an eligible entry transaction on or after 1 July 2024. If it hasn’t changed hands since then, the usual stamp duty rules still apply.
“CIPT applies to residential property too.” It doesn’t.
When Professional Tax Advice Is Valuable
CIPT interacts with stamp duty exemptions, land tax, SMSF structuring and lease arrangements all at once, so getting the timing and structure of a purchase wrong can be an expensive mistake that plays out over years, not just at settlement. This is especially true for developers consolidating parcels of land or businesses restructuring ownership among related entities, where the rules governing entry transactions and aggregation quickly become complicated.
If you’re weighing up a commercial or industrial property purchase, or working out what CIPT means for a property you already hold, it’s worth getting advice before you sign anything. Clear Tax works with commercial property investors, developers, and business owners across Victoria to map out exactly how these rules apply to your situation, and where the numbers land over the long term. Our business tax accountants can also help if you’re restructuring ownership among related entities as part of the purchase.
FAQs
What is Victoria’s Commercial and Industrial Property Tax?
An annual tax of 1% on the unimproved land value of qualifying commercial and industrial properties, replacing stamp duty for properties that enter the scheme from 1 July 2024.
Does stamp duty still apply?
Yes, once, at the entry transaction. After that, the property enters the CIPT system, and subsequent transfers are generally exempt from duty.
Who pays the annual 1% tax?
The property owner, once the 10-year transition period has ended and the property still has a qualifying commercial or industrial use.
Can I finance the transition amount?
Yes, if you’re eligible. First purchasers who are Australian citizens, permanent residents, or Australian businesses, buying for up to $30 million with finance pre-approved by an ADI or other approved lender, can apply for a government transition loan through Treasury Corporation of Victoria. Foreign purchasers aren’t eligible.
Does every sale count as an entry transaction?
No. Duty has to be payable on at least 50% of the property’s market value. If a concession reduces the payable duty below that amount, the property doesn’t enter the scheme.
Does the tax apply to residential property?
No. CIPT only applies to land with a qualifying commercial or industrial use.
What happens if I sell the property?
If it’s already tax reform scheme land, the sale is generally exempt from stamp duty, and the new owner inherits the existing CIPT entry date and timeline.
Disclaimer: This website is designed for informational and educational purposes. Although we exert diligent efforts to maintain the accuracy and reliability of the content, we must disclaim liability for any errors, omissions, or inaccuracies. The content provided is “as is” and is not accompanied by warranties, whether expressed or implied. It should not serve as the sole basis for financial or legal decisions.
Given the evolving nature of financial regulations and conditions, the accuracy and reliability of information may change over time. Users are urged to exercise due diligence and consult with a qualified financial professional for personalised advice. ‘Clear Tax Accountants’ bears no responsibility for direct or indirect consequences, encompassing financial loss or legal matters stemming from the use or misuse of the information on this website.
Please be aware that the information, by no means, is a substitute for financial advice.
