Exemption for construction or renovation of a principal place of residence (PPR)

An exemption from land tax applies to land on which a principal place of residence (PPR) is being constructed or renovated. You will need to make an application to receive this exemption as it is not automatically applied.

• Who is eligible for this exemption?
• How to apply
• Exemption requirements
  • Who is a ‘qualifying person?’
  • When is the ‘works start date’?
  • When is the ‘works finish date’?
  • What is the ‘residence requirement’?
  • When is the ‘qualifying occupation date’?
  • Partial exemptions
  • Joint ownership
  • Notification requirements
• Frequently asked questions

Who is eligible for this exemption?

You can apply for this exemption if:

• you meet the exemption requirements
• construction or renovation of your PPR completes on or after 1 July 2022.

How to apply

• Apply for the exemption in My Land Tax.
• Provide supporting information to help us determine whether you are eligible.
• If construction/renovation will take place over multiple years, you can submit one application for exemptions for those multiple tax years. 

Exemption requirements

Your property must meet these conditions as at 31 December in the preceding year: 

• A qualifying person did not use and occupy the land as their PPR.
• Construction or renovation works have started. 
• Construction or renovation works have not yet completed. 
• A qualifying person intends to continuously use and occupy the land as their PPR for a period of at least 6 months commencing on or before the qualifying occupation date.
• You did not derive any income from the land.
• Where land is subject to a right to reside:
  • the land was exempt as PPR land before the right to reside was granted, and
  • the natural person who has the right to reside is not entitled to a PPR exemption for any other land in Victoria or another jurisdiction.
• You are not entitled to another PPR exemption for any other land in Victoria or another jurisdiction. 

Exemption period

The exemption is available for a maximum of 4 tax years after the year in which construction or renovation commenced (i.e. the works start date). 

The Commissioner has a discretion to extend this exemption for up to an additional 2 additional years where more time is required to complete construction due to the builder going into liquidation.

The Commissioner must be satisfied that a company was contracted to undertake the construction or renovation, a liquidator has been appointed to wind up the company and that, because of the appointment of liquidators, the construction or renovation has not been completed by the date as initially intended. 

You must apply for this time extension through My Land Tax. 

Who is a ‘qualifying person’?

This is the person who must use and occupy land as their PPR (following the completion of the construction or renovation of a residence) for land to be exempt under section 61 of the Land Tax Act 2005: 

• If land is owned by a natural person in their personal capacity, the qualifying person is the same natural person. 
• If land is subject to a right to reside, the qualifying person is the natural person who has the right to reside on the land.
• If land is held under a fixed trust, the qualifying person is the relevant vested beneficiary.

When is the ‘works start date’?

Usually, the ‘works start date’ for the construction or renovation of a residence on land is the earliest of the following dates:

• the date the planning or building permit is issued
• the date the construction or renovation commences
• a date nominated by you that is accepted by the Commissioner. 

You can nominate a works start date for undertaking certain preparatory activities (such as obtaining a quote, consulting an architect, builder or planner, or preparing an application for a planning or building permit). You must notify us in writing at the same time as the application for the exemption and include sufficient evidence of the specific activity that has been undertaken. The Commissioner may either accept or reject the nomination.

When is the ‘works finish date’?

This is usually the date the occupancy permit or the certificate of final inspection is issued. If an occupancy permit or a certificate of final inspection is not required, you must notify us in writing of the date on which the construction or renovation was completed and provide supporting evidence.  

What is the ‘residence requirement’?

A qualifying person must use and occupy the land as their PPR for at least 6 continuous months, starting on or before the qualifying occupation date.

When is the ‘qualifying occupation date’?

The ‘qualifying occupation date’ is the earlier of:

• 6 months after the finish date of construction or renovation
• 4 years after the start of construction or renovation.

This is the date that a qualifying person must start using and occupying the residence as their PPR for at least 6 continuous months. 

Partial exemptions

If only part of the land meets the exemption requirements:

• the exemption applies only to that part of the land
• land tax is assessable on the remaining part of the land, unless another exemption applies to that part.

Joint ownership

Joint owners of taxable land are assessed at 2 levels:

• Joint owner level — joint owners are jointly assessed for land tax on the land, as if it were owned by a single person.
• Individual owner level — each joint owner of taxable land is separately assessed for land tax on:
  • their individual interest in land and any other taxable land owned by the owner alone
  • their individual interest in any other taxable land.

A deduction is provided under section 38(4) to avoid double taxation.

If some joint owners do not meet the exemption requirements (for example, if they are not a qualifying person or they do not meet the residence requirements), a special assessing rule will apply where: 

• no land tax will be assessed at the joint owner level
• the aggregated landholdings of each non-eligible joint owner may be separately assessed.

If an exemption is revoked:

• land tax will be assessed at the joint owner level
• the aggregated landholdings of each non-eligible joint owner may be separately reassessed. 

Notification requirements

If you have been granted an exemption, you must provide written notice to us by email in certain circumstances.

Failing to notify us within the respective time frame is a notification default under the Taxation Administration Act 1997 and penalty may apply. For details on notification default, please refer to Revenue Ruling TAA-008. For details on penalty tax and interest, please refer to Revenue Ruling TAA-007v5. 

If an occupancy permit or a certificate of final inspection is not required

You must notify us of the works finish date within 30 days of the completion of the construction or renovation.

If the construction or renovation is not completed within 4 years

If the construction or renovation is not completed within 4 years of commencement, you must notify us within 30 days after the 4-year period expiring.

If a qualifying person does not move into the residence as their PPR

If a qualifying person does not move into the residence as their PPR by the qualifying occupation date, you must notify us within 30 days of the qualifying occupation date.

If a qualifying person does not meet the residence requirement

If a qualifying person does not meet the residence requirement, you must notify us within 6 months plus 30 days after the qualifying occupation date.

If you plan to sell the property

If you intend to cease to be owner of the property (e.g. by selling the property) before completing the construction or the minimum residence period, you must notify us at least 30 days before you cease to be the owner of the property.

Revoking an exemption

Your exemption may be revoked for the full exemption period if:

• the construction or renovation has not finished within 4 years after the works start date
• a qualifying person does not meet the residence requirement
• you sell the property before completing the construction or the minimum residence period.

If an exemption is revoked, we may assess or reassess your land tax accordingly.

Frequently asked questions

What happens if a qualifying person does not meet the residence requirement?

Your exemption may be revoked if a qualifying person fails to meet the residence requirement.

This happens when a landowner:

• fails to move into the residence on or before the qualifying occupation date, or
• fails to continuously use and occupy the land as a PPR for at least 6 months after moving in. 

You must notify us if the qualifying person fails to (or does not intend to) comply with these residence requirements.

• If a qualifying person does not move into the residence as their PPR by the qualifying occupation date, you must notify us within 30 days of the qualifying occupation date.
• If a qualifying person does not meet the residence requirement, you must notify us within 6 months plus 30 days after the qualifying occupation date.

What if the construction or renovation is not completed within 4 years?

Your exemption may be revoked if the construction or renovation is not completed 4 years after the start date of the works.

You must notify us in writing if the construction or renovation has not completed in time, within 30 days after the 4-year period expiring.

If your construction or renovation is not completed within 4 years because the builder has gone into liquidation, the Commissioner can extend the exemption for up to an additional 2 years. The Commissioner must be satisfied that a company was contracted to undertake the construction or renovation, a liquidator has been appointed to wind up the company and that because of the appointment of liquidators, the construction or renovation has not been completed by the date as initially intended.

You must apply for this time extension through My Land Tax. 

What happens if a landowner sells their property before they complete the construction or renovation of their home?

The exemption will be revoked if you sell the land before you complete the construction or renovation of the home.

You must notify us within 30 days before the settlement date of the property, so we can assess or reassess your land tax for the years in which the exemption was claimed.

What happens after the qualifying person moves into the residence?

After the qualifying person moves into the completed residence, the land may transition to become exempt as a normal PPR in the next tax year.

Where construction or renovation is completed before 1 July

If the qualifying person begins occupying the residence:

• Before 1 July in that year — the land will become exempt land under section 54 for the following tax year 
• After 1 July but on or before 1 December in that year — land tax may be deferred for the following tax year under section 55 if:
  • the land will be continuously used and occupied as a PPR for at least 6 months, and
  • the land will become exempt for the tax year at the end of this period. 

Where construction or renovation is completed on or after 1 July 

If construction or renovation is on or after 1 July in the year preceding the tax year and the qualifying person commences using and occupying the residence as their PPR 

• on or before 31 December in that preceding year, the land will become exempt land under section 54 for the tax year, or
• on or after 1 January in the tax year, land tax may be deferred for the tax year under section 55A if:
  • the land will be continuously used and occupied as a PPR for at least 6 months, and
  • the land will become exempt for the tax year at the end of this period.

When can an exemption be revoked?

Your exemption may be revoked for the full exemption period if:

• the construction or renovation has not finished within 4 years after the works start date
• a qualifying person does not meet the residence requirement
• the landowner sells their property before completing the construction or the minimum residence period.

If an exemption is revoked, we may assess or reassess your land tax accordingly.

Are landowners still allowed to claim dual PPR exemption?

As a general principle, an owner is limited to one PPR exemption in one tax year.

You cannot receive this exemption for any tax year in which you are entitled to another PPR land tax exemption in Victoria or another state or territory.

Are landowners still required to prove acceptable delay requirement?

This exemption does not require you to prove acceptable delay in the construction or renovation; rather, the exemption is available for a maximum of 4 tax years.