The Victorian Government has recently announced housing initiatives. These include the abolishment of stamp duty for some first-home buyers, changing the FHOG in regional Victoria, changes to off-the-plan concession, and a tax for vacant residential property.

These initiatives have to be approved by the Victorian Parliament before they can begin. You should only rely on the exact detail of the changes once the legislation is passed. This is likely to be in June 2017.

Here are the answers to some frequently asked questions about the proposed vacant residential property tax (VRPT).

Our website will be updated with more detailed information when it becomes available.

  1. What is the vacant residential property tax (VRPT)?
  2. What is meant by "vacant"?
  3. When does the VRPT start?
  4. Does the VRPT apply to all residential properties in Victoria?
  5. How much is the VRPT and how is it calculated?
  6. Are there any exemptions?
  7. How will the SRO know if you have a vacant residential property?

1. What is the vacant residential property tax?

The vacant residential property tax (VRPT) is a tax on property owners who own a vacant residential property. 

2. What is meant by "vacant"?

A residential property is vacant if it is unoccupied for more than six months in a calendar year. The six months do not need to be continuous.

3. When does the VRPT start?

The VRPT will apply from 1 January 2018. 

The Victorian Government intends to consult with property groups on the design of this tax. More details will be available in due course. 

4. Does the VRPT apply to all residential properties in Victoria?

No. The VRPT will only apply to vacant residential properties located in the following local council areas: 

  • Banyule 
  • Bayside 
  • Boroondara 
  • Darebin 
  • Glen Eira 
  • Hobsons Bay 
  • Manningham 
  • Maribyrnong 
  • Melbourne 
  • Monash 
  • Moonee Valley 
  • Moreland 
  • Port Phillip 
  • Stonnington 
  • Whitehorse 
  • Yarra 

Vacant residential properties outside these local council areas will not be subject to the VRPT. 

5. How much is the VRPT and how is it calculated?

The VRPT will be an annual tax of 1 per cent of the capital improved value (CIV) of each taxable property. For example, if the taxable property has a CIV of $500,000, the tax will be $5000. 

The CIV of a property is the value of land and buildings as determined every second year as part of the council valuation process and is displayed on council rates notices. 

6. Are there any exemptions?

Yes. There will be specific exemptions with qualifying criteria. These exemptions will include:

  • Holiday homes (owned by those with a principal place of residence in Australia),
  • City units for work purposes,
  • Properties in deceased estates, and
  • Homes subject to legitimate temporary absences (e.g. medical care, overseas appointments) 

The design of the exemptions will be the subject of consultations with the property sector over the next two months. More details will be available in due course.

7. How will the SRO know if you have a vacant residential property?

The VRPT will be self-reporting, so an owner of vacant residential property will be required to notify us of any vacant properties that they own. 

We will undertake monitoring and compliance activities to ensure that vacant residential properties are being declared as required.