What the 2024 changes mean for buyers, sellers, and brokers
As of 1 July 2024, stamp duty on eligible commercial and industrial property transactions in Victoria has officially been replaced under the Commercial and Industrial Property Tax Reform Act 2024 (Vic).
This major shift introduces a new annual tax in place of the traditional upfront duty, changing how investors, developers, and business owners structure deals across the state.
If you’re buying, selling, or advising on commercial or industrial property, understanding how this reform works is now essential.
Here’s what you need to know.
Quick Snapshot
- Upfront stamp duty scrapped for eligible commercial and industrial property contracts signed on or after 1 July 2024
- Replaced with an annual tax (CIPT) of 1% of the land’s unimproved value, paid over 10 years
- Applies only to certain property types, including some mixed-use and build-to-rent developments
- New disclosure rules for vendors under Section 32 must be followed to avoid contract rescission
What’s Actually Changed?
The headline: stamp duty is not being abolished outright, but it is being replaced for eligible transactions with a new annual property tax.
Under the new system, eligible purchasers of commercial and industrial property won’t pay a lump sum in stamp duty at settlement. Instead, they’ll pay an annual tax based on the land’s unimproved value, known as the Commercial and Industrial Property Tax (CIPT).
The goal of the reform is to improve market mobility by lowering the upfront costs of buying commercial and industrial land. Once the CIPT is paid, there will be no stamp duty associated with the property for subsequent transactions.
Key Points of the New Tax Reform
1. Applies Only to Contracts Signed from 1 July 2024
This tax reform only applies if the contract of sale is dated 1 July 2024 or later. Any earlier transactions will still be subject to the current stamp duty system.
2. Only Certain Property Types Are Eligible
The reform covers most commercial and industrial properties, and may also apply to:
- Some mixed-use tenancies, depending on their classification
- Build-to-rent developments, which receive a discounted rate
Residential properties are excluded.
3. What Happens to Stamp Duty?
For eligible transactions:
- Stamp duty is not payable upfront
- Instead, CIPT is charged at:
- 1% of the land’s unimproved value, or
- 0.5% for build-to-rent developments
- It’s payable annually for 10 years, starting from the year of settlement
So while stamp duty isn’t technically “abolished,” it’s replaced with a spread-out cost that can ease the immediate financial burden on buyers.
4. CIPT Is Paid Every December
CIPT is due on 31 December each year, alongside land tax, which is still payable under this system.
5. Government Charge Over the Property
To secure the annual payments, the Victorian Government will register a statutory charge over the land (under Section 27 of the Act). This charge:
- takes priority over all other mortgages or interests
- remains in place until the CIPT is fully paid
- may affect your ability to refinance or sell unless carefully managed
Purchasers relying on vendor certificates alone may not qualify for certain protections under the Act and should seek legal advice from commercial lawyers.
Real-World Scenarios for Buyers and Sellers
Understanding how the reform works in practice can be tricky, so let’s break it down with a few simple examples.
Example 1: Buying a $2.5M Warehouse in June 2025
| Regime | Stamp Duty or CIPT Cost | Payment Timing | Impact on Buyer |
| Old Regime pre 1 July 2024 | ~$71,250.00 upfront stamp duty (estimated based on SRO calculator) | Lump sum paid at settlement | Significant upfront cost may affect finance/cash flow |
| New Regime from 1 July 2024 | 1% of unimproved land value payable annually over 10 years ($7,500 per annum if unimproved value is $700,000.00 ~ $750,000) | Annualised over 10 years, payable from 31 December from sale ($70,000) | More manageable payments, better for budgeting renovations or business expansion and government-supported loans. |
This new system gives buyers more breathing room at settlement, especially helpful if renovations or business expansions are also on the cards, by amortising stamp duty over 10 years.
Furthermore, once the CIPT is paid, it will incentivise more commercial and industrial acquisitions as it will be abolished for the next buyer.
Example 2: Selling a Mixed-Use Property in Early 2025
You own a building with a ground-floor retail space and residential apartments above, and you’re looking to sell in 2025.
Whether the buyer qualifies for the new tax regime depends on how the property is categorised.
If it’s predominantly commercial, CIPT may apply. However, if it’s primarily residential, it will not apply.
We note that changing the use at a later date will impact CIPT assessment, and there are significant anti-avoidance provisions that may result in criminal prosecution.
In this case, it is vital you seek advice from expert commercial lawyers early so you can update your vendor statement to ensure compliance with your obligations under Section 32 of the Sale of Land Act 1962 (VIC)
Why This Reform Matters for Victoria’s Property Market
The Commercial and Industrial Property Tax Reform is more than just a legal update; it’s a deliberate shift in how Victoria encourages property investment and commercial growth.
Under the old model, stamp duty could represent a significant barrier to entry. For many investors and businesses, that upfront cost added hundreds of thousands of dollars to a property purchase, locking up capital that could otherwise be used for development, fit-outs, or operations.
By replacing this with an annual tax spread over ten years, the Victorian Government is aiming to:
- make it easier to buy commercial and industrial property, especially for first-time investors and small-to-medium enterprises;
- encourage higher transaction volumes, creating a more dynamic and responsive property market;
- support the build-to-rent sector, a key part of the state’s strategy to increase housing stock; and
- improve capital mobility, allowing businesses to reconfigure or relocate without being penalised by a second round of stamp duty.
While the long-term financial outcome may be similar, the reform helps lower the upfront burden, and that can make a real difference in business planning and decision-making.
Disclosure Requirements for Vendors: What Needs to Change
If you’re selling a commercial or industrial property in 2025, your Vendor Statement (commonly known as a Section 32) must be updated to reflect the new tax system, or risk the buyer rescinding the contract.
Moreover, if you are a buyer, you cannot simply rely on the disclosure made by the Vendor under the Vendor Statement.
Here’s what you now need to include:
1. Does CIPT Apply to the Property?
You must disclose whether the property qualifies under the new reform. If CIPT applies, this must be clearly stated, and the relevant certificate must be provided in the Vendor Statement.
2. Estimated Unimproved Land Value
The details on the unimproved land value used to calculate CIPT must be included. Buyers will want a realistic estimate of ongoing annual costs.
3. Government Charge Under Section 27
Vendors must inform buyers of the statutory charge that will remain over the land until the full ten years of CIPT payments are made.
4. Transitional Status (if applicable)
If the property is already subject to CIPT and is being resold during the ten-year period, you’ll need to explain how the remaining obligations are handled.
Failing to provide any of the above may constitute a breach of the Sale of Land Act 1962 (Vic). This gives the buyer the legal right to walk away, even late in the transaction.
What You Should Be Asking Before You Buy or Sell
Here are the three key questions to keep in mind:
1. Is the property eligible for the reform?
Mixed-use and build-to-rent tenancies may sit in a grey area. Check the classification before assuming you qualify.
2. Do you need finance to manage CIPT payments?
Some buyers may prefer to obtain a loan to assist with the CIPT payments, such as a transitional loan to assist with managing cash flow.
However, some loans are only available for certain eligible transactions, so buyers should discuss options with their financial brokers and financial institutions.
3. Are your legal documents compliant?
Both buyers and sellers must ensure their paperwork reflects the new requirements pursuant to Section 32 of the Sale of Land Act 1962 (Vic).
For vendors, this means updated disclosure, including certificates with the improved value of land known as CIPT certificates.
For buyers, this means confirming the tax is correctly assessed, eligibility and due diligence as to the CIPT and understanding the significance of the Victorian Government Charge under Section 27 of the Commercial and Industrial Property Tax Reform Act 2024
Need Help Navigating the New Stamp Duty Rules?
Whether you’re buying, selling, or advising on a commercial property, understanding your obligations under the new tax regime is essential.
Our team at Nakat Law can guide you through eligibility, disclosure requirements, finance options, and legal strategy, so you can move forward with confidence.
Book a consultation today and get clear, practical legal advice tailored to your property transaction.
Disclaimer
The content of this publication is provided for general information purposes only and is not legal advice. It should not be relied upon as a substitute for legal advice tailored to your specific circumstances. Nakat Law disclaims all liability arising from reliance on this publication.
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