vacant residential land tax

 

FROM 1 JANUARY 2025

Vacant residential land tax (VRLT) applies to residential land in the whole state of Victoria that is vacant for more than 6 months in total (not just continuous) in the preceding calendar year.  Residential land includes:

1. land with a home on it
2. land with a home which is being renovated or where a former home has been demolished
3. a new home is being constructed land with a home on it that has been uninhabitable for 2 years or more

It does not include:

1. land without a home on it
2. commercial properties
3. residential care facilities

VRLT is based on the number of consecutive years the land has been liable for VRLT and is:

• 1% of the Capital Improved Value (CIV) of the land for the 1st year
• 2% of the CIV of the land where the land is liable for VRLT for a second consecutive year
• 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year.

SELF ASSESSMENT

VRLT is a SELF ASSESSMENT TAX and an owner of taxable vacant residential land MUST SELF REPORT to the State Revenue Office on their online portal by 15 JANUARY if a property has been vacant for 6 months in the preceding year.

IF A EXEMPTON FROM NUMBERS 4-7 FROM THE BELOW EXEMPTION LIST A PROPERTY OWNER WILL NEED TO APPLY FOR THIS EXEMPTION ON THE ONLINE PORTAL AND WILL NEED TO NOTIFY AS ABOVE BY 15 JANUARY

If the 15 January date it is best to report ASAP as the following penalties apply to owners who fail to notify under a default notification:

• 5% if the owner voluntarily notifies the SRO about any vacant residential properties before they start an investigation
• 20% if the owner notifies the SRO about any vacant residential properties after they start an investigation
• up to 90% if the SRO believes that the property owner intentionally disregarded the law and hindered investigations

EXEMPTIONS

The following exemptions apply:

1. LAND THAT IS EXEMPT FROM LAND TAX – This includes the Main Residence of an individual. The VRLT only applies to Residential Property that already attracts Land Tax.
2. CONSTRUCTION & RENOVATION – will not be considered vacant for 2 years from the date of the issuance of a building permit.  Renovations must be substantial enough to issue a building permit.
3. UNHABITABLE RESIDENCES – properties with unhabitable residences will not be considered for 2 years.
4. CHANGE OF OWNERSHIP – provided that SETTLEMENT occurs prior to 31 December the Residential Property is exempt from VRLT the following year.
5. HOLIDAY HOME EXEMPTION – Property is used by the owner or vested beneficiary of a trust or their relative for at least 4 weeks in a calendar year, provided that they have a principal place of residence (PPR) in Australia.

The Commissioner will also need to be satisfied that the home is a genuine holiday home based on distance between the properties, frequency and nature.

Only 1 holiday home can be claimed as an exemption by an individual.

A company or trust is eligible if:

1. It has continuously owned the home since 28 November 2023
2. There have been no changes in beneficial ownership of the land since 28 November 2023, except for transfers between relatives.
3. One or more eligible natural persons used another property in Australia as their PPR in the preceding tax year and used and occupied the holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year as follows:

Companies or trustees that entered into a contract to purchase a holiday home on or before 28 November 2023 but settle after that date are also eligible.

6. THE PROPERTY BECOMES RESIDENTIAL LAND – if Land becomes Residential Land in a calendar year VRLT is exempt for the next two years.
7.  WORK ACCOMODATION EXEMPTION - exemption applies to a property used and occupied by the owner for work purposes, which meets the following requirements:
8. The property must be occupied by the owner or vested beneficiary for at least 140 days in a calendar year for the purpose of attending their workplace or conducting business.
9. The owner or vested beneficiary must have a principal place of residence in Australia.
10. Workplace must be in Victoria

 

For more information, please click the links below

 

SRO main page with factsheets, explanations, etc:

https://www.sro.vic.gov.au/vacant-residential-land-tax

Link to the Online Portal:

https://www.sro.vic.gov.au/vacant-residential-land-tax/making-vacant-residential-land-tax-notification