Vacant Residential Land Tax
Vacant Residential Land Tax
Vacant Residential Land Tax is a tax imposed by the Victorian state government on residential properties that are deemed to be vacant for a certain period of time. The tax is aimed at encouraging property owners to make their properties available for rental or sale in order to increase the supply of housing and reduce vacancy rates.
Vacant Residential Land Tax applies to properties that are left unoccupied for more than six months, and that are located in designated areas where housing demand is high inclduing Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse and Yarra council areas.
The definition of ‘vacant’ by the State Revenue Office refers to a property that has, for more than six months in the preceding calendar year, has not been lived in 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 made in good faith.
The occupation does not need to be by the same occupant or for a single continuous period and it is not enough that the property be available for occupation, such as by listing on a short term rental website. It must actually have been used and occupied for more than six months. Further, it is not enough for the property to be used intermittently or on a casual basis by friends or family of the owner. The use and occupation must be either as a principal place of residence or subject to a bona fide lease or letting arrangement.
The annual tax is set at 1% of the property’s capital improved value. For example, if a vacant home has a capital improved value of $500,000, the tax will be $5000.
Vacant Residential Land Tax is intended to be a deterrent rather than a revenue-raising measure, and the revenue collected is generally reinvested in affordable housing programs or other initiatives aimed at increasing the supply of housing. Property owners who can demonstrate that their property is genuinely unavailable for rent or sale, such as if it is undergoing renovations or is used as a holiday home, may be exempt from the tax.
If you are purchasing or own property in one of these council areas and it will or has been unoccupied for six months or more in the current year, you are required to notify the State Revenue Office of Victoria by 15 January in the following year. Further information on vacant residential land tax can be obtained from the State Revenue Office website here: https://www.sro.vic.gov.au/vacant-residential-land-tax
