Hey, you're new here! I love new people, welcome.

This blog explains how buying, building or renting a house works in Australia. It makes an interesting reading for newbies and outsiders, expats and newcomers, basically anyone who is not familiar with Australian real estate market.

You may want to subscribe to Home I Own, either via RSS or via email. Thanks for visiting!

Every 2 - 3 years every council evaluates all the properties in its area. There are 3 ways of valuating a property: using Site Value, Capital Improved Value or Net Annual Value.

Site Value means just land value; Capital Improved Value means value of both the house and the land. Net Annual Value is a bit different – it means how much the annual rent would be if the property was leased (less the landlord’s expenses). Usually for residential properties it is calculated as 5 % of Capital Improved Value.

There are 79 councils in Victoria and they use different methods of valuation. Sounds too complicated, right? Wrong! There is an easy way to get the real value of the property (as recorded in council’s books) using council rates that the owner pays.

For quite a while I thought that council rates are the land tax, but it’s not so. In Victoria, council rates consist of 2 parts. One part is called “municipal and garbage service charges” and it is not affected by the price of the property – meaning all the properties in the same council area pay the same. The other part is called “general rates” and it is affected by the value of the property – meaning those who have more expensive properties pay higher general rates.

How rates bill is calculated