In February 2017, the Victorian Government announced a range of new housing initiatives. These include the abolishment of stamp duty for some first-home buyers, changing the FHOG in regional Victoria, changes to the off-the-plan concession, and the introduction of a tax on vacant residential properties.
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.
Our website will be updated with more detailed information as it becomes available.
Here are the answers to some frequently asked questions about the proposed vacant residential land tax.
- What is the vacant residential land tax?
- What is meant by "vacant"?
- When does the tax start?
- Does the tax apply to all residential properties in Victoria?
- How much is the tax and how is it calculated?
- Are there any exemptions?
- When is a holiday home exempt?
- When is a residential property used for work purposes exempt?
- What if a property changes ownership during a year?
- What if a property is converted to residential premises during a year?
- How will the SRO know if you have vacant property?
- Does the tax apply to properties leased through online platforms?
- Can you object to a tax assessment?
- Why does the tax only apply to properties in some local council areas?
The vacant residential land tax (commonly referred to as the vacant residential property tax or vacancy tax) is a tax on residential properties in the inner and middle suburbs of Melbourne which are unoccupied for more than six months a year.
A property will be considered vacant if it was unoccupied for more than six months in the preceding calendar year by:
- The owner, or the owner’s permitted occupier, as their principal place of residence, or
- A person under a lease or short-term letting arrangement
The six months does not need to be continuous.
The tax will apply from 1 January 2018 and is based on use and occupation in the preceding year. For example, tax liabilities for the 2018 tax year will based on vacancy in 2017.
- Glen Eira
- Hobsons Bay
- Moonee Valley
- Port Phillip
This is an annual tax of 1 per cent of the capital improved value (CIV) of taxable land. For example, if the taxable land 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 by the general valuation process. The CIV of a property is displayed on the owner’s council rates notice.
Yes. In addition to existing exemptions for land tax purposes, there will be several new exemptions which will apply to the vacant residential land tax. These include exemptions for:
- Holiday homes,
- City apartments/homes/units used for work purposes,
- Property transfers during the year, and
- New residential properties
The holiday home exemption will apply to properties which are occupied as a second home by the owner for at least four weeks in the year.
This exemption will be subject to the following conditions:
- The land owner must have had a principal place of residence in Australia in the preceding year, and
- The Commissioner of State Revenue must be satisfied that the property for which the exemption is being sought is a genuine holiday home
An owner will only be able to claim the exemption in respect of one holiday home in a calendar year.
This exemption is designed for properties owned and used by people who stay in the inner and middle suburbs of Melbourne for work purposes, but whose principal place of residence is elsewhere in Australia.
The exemption will apply to properties that are occupied for at least 140 days a year for the purpose of attending the owner’s workplace.
This exemption will be subject to the following conditions:
- The land owner had a principal place of residence in Australia in the preceding tax year, and
- The place of work must be in one of the specified local council areas
Land that changes ownership during the year will be exempt from the tax in the following calendar year. For example, if a property is sold and transferred during 2018, it will be exempt from the tax for the 2019 tax year.
Land that becomes “residential land” during the year will not be subject to the vacant residential land tax in the following calendar year. For example, if a warehouse is converted into residential apartments during 2018, it will be exempt from the vacant residential land tax for the 2019 calendar year.
Owners of vacant residential properties located within the specified local council area will be required to notify the Commissioner of State Revenue by 15 January in each year, and provide any information that the Commissioner requests. If a property is eligible for an exemption, the land owner will be asked to notify the SRO and advise which exemption applies.
If an owner fails to make a notification by 15 January, it will be a notification default and may be subject to penalty tax under the Taxation Administration Act 1997.
We will conduct monitoring and compliance activities to ensure that vacant residences are being declared as required. Our compliance program includes comparing our data with other state and federal agencies, and conducting investigations into suspected avoidance.
Yes. If a property in one of the specified local council areas is leased through an online platform, it will be subject to the tax if it is unoccupied for more than six months in a calendar year. The six months does not need to be continuous.
After receiving a notice of assessment, an owner has 60 days to object. If the owner is dissatisfied with the objection decision, they have a further 60 days to request a review by the Victorian Civil and Administrative Tribunal (VCAT) or appeal the decision to the Supreme Court.
The tax is designed to address the number of properties being left vacant across inner and middle suburbs of Melbourne, as well as housing availability, by encouraging owners to make them available for either purchase or rent.