Vacant Residential Land Tax in Victoria

Vacant Residential Land TaxBy Paul Bunting, MSI Ragg Weir, Accountants, Melbourne.

The Victorian Government has introduced a tax on a vacant residential property which comes into effect from 1 January 2018.

An annual charge of 1% applies to the capital improved value of a property that qualifies as vacant residential land.  It is targeted at housing in the inner and middle suburbs of Melbourne which is unoccupied for more than six months in a calendar year.

The tax will apply to residential properties in the following council areas:

Banyule Melbourne
Bayside Monash
Boroondara Mooney Valley
Darebin Moreland
Glen Eira Port Philip
Hobsons Bay Stonnington
Manningham Whitehorse
Maribyrnong Yarra

The owner must advise the State Revenue Office that it applies to their property by the 15th of January.

A residential property is defined as land that is capable of being used solely or primarily for residential purposes and does not include Vacant Land, Residential Care Facilities and Retirement Villages.

A property is considered vacant when it is not used or occupied for more than 6 months:

  • By an owner or the owners permitted occupier as their principal place of residence;
  • By a natural person under a short term letting arrangement; and
  • Due to significant renovation or reconstruction.

The property does not need to be occupied for six consecutive months. Provided a property was occupied for an aggregate of six months in the preceding calendar year, the vacant residential land tax does not apply for that tax year.

Exceptions are available in the following circumstances:

Holiday Houses

  • Limited to one holiday home
  • Applies to a second holiday home occupied by the owner for at least 4 weeks in a calendar year.
  • Owner must have had a Principal Place of Residence (PPR) in Australia in that year
  • Commissioner must be satisfied it is a genuine holiday home

City properties used for work

  • Occupied for at least 140 days in a calendar year
  • Owner must have had a Principal Place of Residence (PPR) in Australia in that year
  • Place of work must be in one of the specified local council areas.

Other exemptions

  • New residential properties
  • Properties acquired during the preceding calendar year

Owners are required to notify the State Revenue Office by the 15 January in each year. For more information or assistance, we recommend you contact your local MSI representative or feel free to contact the author.

Contact the author directly by email or by telephone.

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