CIPT vs Stamp Duty: How Long You Hold the Property Changes Everything

Ask any commercial property buyer in Victoria what they really want to know about the new Commercial and Industrial Property Tax, and the question is almost always the same.

Am I going to pay more or less than I would have under the old system?

The honest answer is: it depends on how long you hold the property. CIPT does not give every buyer the same deal that stamp duty did. For some, it is a meaningful saving. For others, it costs more over time. The variable that decides which side you land on is your hold period.

This article walks through the maths with worked examples, and explains where the tipping point sits for the average commercial property in Victoria. If you are weighing up a purchase, it is the conversation to have with your conveyancer and accountant before you sign.

If you are new to CIPT, start with our plain-English guide to how CIPT works and come back to this one.

The short version

Short holds win. If you buy and sell within a few years, paying one or two annual CIPT bills costs less than a full lump-sum stamp duty would have.
Long holds lose. Over 20 or 30 years, annual CIPT bills add up beyond what a one-off stamp duty would have cost.
The tipping point sits somewhere around the 10 to 11 year mark for many commercial properties, but the exact figure depends on land value, purchase price, and what kind of property you are buying.
The 10-year deferral matters. New entry-transaction buyers do not start paying annual CIPT until year 11, which extends the break-even point. Buyers acquiring a property already in CIPT inherit the existing clock, which shortens it.

How the maths actually works

Under the old stamp duty system, a buyer paid one lump sum at settlement and never again, regardless of how long they held the property. A $1 million commercial purchase in Victoria typically attracted around 5.5% stamp duty, or about $55,000.

Under CIPT, the maths is different in three ways:

The first sale on or after 1 July 2024 still attracts stamp duty. That buyer still pays the lump sum. After that, no buyer ever pays stamp duty on that property again.
A 10-year deferral applies before the annual tax begins. New entry-transaction buyers get a decade with no CIPT bills.
An annual tax applies to the property’s unimproved land value. A property with $600,000 of unimproved land value, at the current rate, attracts roughly $6,000 a year in CIPT, every year, indefinitely.

Whether that annual cost adds up to more or less than a one-off stamp duty depends on time. The longer you hold, the worse CIPT looks compared to the old system. The shorter you hold, the better.

Four scenarios to make it concrete

The numbers below use a $1 million commercial property with $600,000 of unimproved land value, taxed at an indicative 1% annual CIPT rate. Real numbers will vary with valuation, rate changes and contract structure. These are illustrative, not advice.

Scenario 1: Pre-1 July 2024 buyer, 20-year hold

Paid stamp duty in 2023 at around $55,000
Never enters CIPT during the hold period because the property is not sold
Total property-transaction tax over 20 years: about $55,000

Scenario 2: Entry-transaction buyer (post-1 July 2024), 20-year hold

Pays final stamp duty at settlement, about $55,000 (or spreads it via the 10-year transition loan)
10-year deferral, no annual CIPT in years 1 to 10
Years 11 to 20, 10 annual bills of about $6,000
Total property-transaction tax over 20 years: about $115,000

Scenario 3: Buyer purchases in year 12 (property already past entry transaction), 20-year hold

No stamp duty payable, property is already in CIPT
Annual CIPT of about $6,000 every year from settlement
20 years of annual bills
Total property-transaction tax over 20 years: about $120,000

Scenario 4: Buyer purchases in year 12, 5-year hold

No stamp duty payable
Annual CIPT of about $6,000 for 5 years
Total property-transaction tax over 5 years: about $30,000

The pattern is clear. The buyer with the shortest hold pays the least. Long-hold owners pay more.

Where the tipping point sits

For an entry-transaction buyer enjoying the 10-year deferral, the break-even point against the old stamp duty system sits well into year 20 or beyond. The deferral is generous, and the cumulative annual bills take time to catch up to a $55,000 lump sum.

For a buyer acquiring a property already in CIPT and paying annual bills from day one, the break-even is much shorter. With no stamp duty saved upfront, every annual bill is pure additional cost compared to a stamp-duty-paid alternative that no longer exists.

The headline rule of thumb is that around 10 to 11 years is the rough threshold for many commercial properties. Shorter than that, CIPT tends to be cheaper. Longer than that, the old stamp duty system would have cost less.

The exact figure shifts with three things: the property’s unimproved land value, the relationship between purchase price and land value, and whether the buyer used the transition loan.

What this means for different buyers

Investors and short-hold buyers

CIPT generally favours investors who buy and sell within a 5 to 8 year window. The combination of no upfront stamp duty (when buying a property already in CIPT) and a manageable annual cost beats a one-off lump sum every time.

For investors triggering the entry transaction themselves, the 10-year deferral makes the maths even more attractive, because no annual bills appear until year 11.

Owner-occupiers and generational holds

If you are buying a commercial property to operate your own business from for 20 or 30 years, or you are looking at an asset to pass down through the family, CIPT generally costs more over the full hold than the old stamp duty system would have. The annual bills compound over time.

That does not mean don’t buy. It means understand what the full lifetime tax cost looks like before you commit, and factor it into how you structure the purchase.

SMSF and long-term portfolio holders

Self-managed super funds and long-term portfolio holders are typically in the long-hold camp, and the analysis above applies. CIPT shifts the cost from upfront to ongoing, which can affect cash flow modelling and how the property contributes to fund performance.

This is exactly the conversation to have with both your accountant and your conveyancer before signing.

Developers and short-cycle holders

Developers acquiring sites for refurbishment or redevelopment typically come out well ahead under CIPT. Short hold, minimal annual bills, no stamp duty if the property is already in the system. If the use changes, the CIPT rules around dropping out of the system also become relevant.

What about the transition loan?

The 10-year transition loan, facilitated by the Treasury Corporation of Victoria, lets eligible entry-transaction buyers spread the final stamp duty over 10 annual instalments instead of paying as a lump sum at settlement.

Whether the transition loan is worth using depends on interest costs versus your alternatives, your cash flow position, and how long you plan to hold. It does not change the total tax bill, but it shifts the cash flow profile in a way that can suit some buyers.

It is one of the more nuanced calls in any CIPT-affected transaction. The right answer comes from running the numbers against your actual circumstances, not from a rule of thumb.

Will the rules change again?

CIPT has been tightened twice since launch, first with the June 2025 subdivision rule, then with the 2026 amendments around provisional determinations and the retrospective tightening of the entry-transaction definition.

The direction of travel so far has been anti-avoidance and tighter administration, not rate changes. The 2026-27 Victorian Budget did not announce any new CIPT measures. That said, a 1% rate sitting unchanged for decades is a strong assumption. Building flexibility into long-term modelling is sensible.

For the most current position, see our 2026-27 CIPT update.

The decision framework

Before you sign on a commercial property in Victoria, work through four questions:

Is the property already in CIPT, or will yours be the entry transaction? This decides whether you pay stamp duty at settlement.
How long do you realistically plan to hold the property? Be honest. Investor plans change, but the maths is unforgiving on long holds.
What does the full-lifetime tax cost look like under both regimes? Compare like for like, not just headline figures.
Does the transition loan suit your cash flow position? If you are triggering the entry transaction, this is worth modelling.

Most buyers can answer the first two. The third and fourth are conveyancer-and-accountant territory.

Talk to a Victorian commercial conveyancer

CIPT is the biggest shift to commercial property tax in Victoria in a generation, and the maths matters. Whether you come out ahead depends on the numbers, not the headlines.

Tick Box Conveyancing handles commercial and industrial transactions across Victoria every week, from offices in Moonee Ponds, Mornington and Geelong. Director Martin Galea has more than 30 years of experience in conveyancing and property law, sits on industry advisory bodies, and works with accountants and commercial agents across the state.

We will run the numbers with you, in plain English, before you sign.

Call 1300 363 165 or get a free quote online.