Life Interests and Land Tax – Abraham v Commissioner of State Revenue [2026] VCAT 351
The Victorian Civil Administrative Tribunal (VCAT) recently considered whether a widow (Applicant) held a life estate in possession in a holiday home, and if so, how that interest should be treated for Victorian land tax purposes. The decision highlights the importance of including appropriate provisions in a will, where the will provides a right to use or occupy a particular property.
Background
The Applicant and her husband each held a 50% interest in their holiday home as tenants in common in equal shares. Following the death of the husband, his will provided the Applicant with the right to use and occupy his 50% interest in the property during her lifetime.
An application by legal personal representative was recorded on the title to the property, listing the executors of the husband’s will as the registered proprietors of his 50% interest. The Applicant remained on title as the registered proprietor of her 50% interest in the property.
For the 2023 land tax year, the Commissioner of State Revenue (Commissioner) assessed the Applicant on the basis that she was taken to own the whole property. Specifically, the assessment issued by the Commissioner treated the Applicant as holding:
her 50% interest as registered proprietor; and
the deceased’s 50% interest as holder of a life estate in possession.
The Applicant contented that the deceased’s 50% interest should be assessed separately to the executors.
The Decision
The central question was whether the provisions of the will created a life estate in possession, or merely a more limited right of occupation. This distinction was critical as under section 11 of the Land Tax Act (Vic) a person who holds a life estate in possession in land is deemed to be the property owner for the purposes of land tax.
If the Applicant held a life estate interest in the deceased’s 50% share of the property, then she would effectively be treated as owning 100% of the property, and land tax assessed accordingly.
VCAT accepted the established principle that a gift of ‘use and occupation’ in a will ordinarily gives rise to a presumption that a life estate was intended. The Applicant, unsuccessfully, argued that the surrounding circumstances and language of the will displaced that presumption.
In reaching its determination, VCAT relied on the following:
there was no evidence of a contrary intention to rebut the presumption, regardless of the terms ‘permit’ to ‘use and occupy’ in the will;
the Applicant was obliged to pay for repairs and taxes for the property, consistent with life tenancy obligations; and
the presumption was not displaced by an absence of an express right to rent from the property.
Taking the above into consideration, VCAT held that the Applicant held a life estate in possession in the deceased’s 50% interest. Therefore, for the purposes of land tax, she was deemed to own 100% of the property.
Practical Implications
The decision is a timely reminder that rights of ‘use and occupation’ may create a life estate, rather than a mere personal right to reside in a property. Where a life estate arises, the land tax consequences can differ significantly from those that would otherwise apply if the property was instead assessable to an estate or other owners.
The wording of contained in wills and resulting land tax implications should be carefully considered when life interests are intended to be created.
For more information, please contact:
Alasdair Woodford
Principal
T: 03 5225 5217 | M: 0436 456 144
E: awoodford@ha.legal
Joseph Flanagan
Senior Associate
T: 03 5226 8504 | M: 0491 307 550
E: jflanagan@ha.legal
Tayla Berger
Senior Associate
T: 03 5226 8559 | M: 0407 825 365
E: tberger@ha.legal
This article was prepared with the assistance of Philippa Duniam, Law Clerk.
