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If you solely or jointly own the home you live in, it is your principal place of residence (PPR) for land tax purposes.

The PPR exemption exempts land owned by a natural person (an individual), who uses and occupies that land as their PPR, from land tax.

The exemption is also available for land owned by:

  • Eligible trustees, and
  • A person, which is used and occupied as the PPR of a natural person who has been granted a right to reside on that land under a will or testamentary instrument

It is not available, however, for land owned by companies, body corporate and other organisations, even if the land is occupied by any of the shareholders or members of the company or organisation, unless an eligible trust arrangement applies.

The following provides more information on the PPR exemption, including how it applies in different situations and how you can make a claim.

PPR exemption requirements

To be eligible for the PPR exemption, certain land and occupancy requirements must be satisfied. As explained below, the PPR exemption may also apply to the following circumstances:

Land requirements

The PPR exemption is generally available for one residence only.

If you normally live in a place outside of Victoria, you will not be eligible for a PPR exemption on any land you own in Victoria.

Land cannot be regarded as your PPR unless there is a building affixed to the land which is designed and constructed primarily for residential purposes and is lawfully used as a place of residence. For newly built homes, this means the certificate of occupancy must have been issued.

Occupancy requirements

Where the landowner is an individual owner or eligible trustee, that landowner or the vested beneficiary of the eligible trust must live on the land for at least six months since 1 July of the year before the assessment to be eligible for the PPR exemption.

We may defer the payment of land tax for six months if landowner or resident vested beneficiary is unable to meet this requirement because either:

  • They started occupying the land after 1 July of the year before the assessment, or
  • The land was purchased after 1 July of the year before the assessment and they didn’t start living on it in the year before the assessment

After that six-month period, provided the land has been continuously used as a PPR by an individual owner or resident vested beneficiary, an exemption will apply to that land for the relevant assessment year.

Example A

Jorge continuously uses land as his PPR for six months from 1 September 2016 to February 2017. The land would be PPR exempt for the 2017 assessment year.

Example B

Wei-Ai purchased a property in November 2016, but only started living in it on 2 February 2017. By 2 August 2017, she had continuously used the land as her PPR for six months. The land would be PPR exempt for the 2017 assessment year if she did not occupy any other property she owns as her PPR between the dates that she is claiming the PPR exemption.

If you need to defer your land tax assessment, until you are able to live on the land continuously for six months, please call us on 13 21 61 and have your assessment handy.

Apply for the PPR exemption as an individual owner

To claim the exemption as an individual owner, call us on 13 21 61 or lodge an application.

Can you get the PPR exemption for land adjoining your PPR?

The PPR exemption may extend to adjoining (contiguous) land that is also owned by the individual owner or eligible trustee if this land:

  • Does not contain a separate residence,
  • Enhances the PPR land, and
  • Is used solely for the private benefit and enjoyment of the individual owner or the resident vested beneficiary living on the PPR land

A separate residence means a building affixed to the land that is capable of separate occupation. Accordingly, if the adjoining land contains a house, cottage or granny flat, the PPR exemption cannot extend to the adjoining land. A building that does not have all the amenities of an ordinary home, such as a kitchen and bathroom facilities, will not be considered a separate residence for the purpose of the PPR exemption.

Examples of adjoining land that may qualify for this exemption include adjoining land that contains a pool, tennis court or garden, provided that the adjoining land does not also contain a separate residence.

Please note that prior to the 2013 land tax assessment year, provided the land met the other requirements, this exemption was available where the adjoining land had a separate residence.

Apply for the PPR exemption for adjoining land

To claim the exemption on adjoining land, you must write to us and provide:

  • The date the property became used exclusively for your own benefit and enjoyment,
  • Details regarding the usage of the land, including photos

Eligible trustees and the PPR exemption

The PPR exemption is only available for land owned by trustees of a trust:

  • Under which there are vested beneficiaries, being natural persons who have a present vested beneficial interest in the land, such as a fixed trust, and
  • That land is used and occupied as the PPR of a natural person who has a present vested beneficial interest in the land (resident vested beneficiary)

To be eligible for the exemption, the land must meet the land requirements and the beneficiary must meet the occupancy requirements.

A trustee may be eligible for the PPR exemption, including where the land is held:

  • On a fixed trust or bare trust for a person who resides on the land,
  • By the trustee appointed under a will and occupied by one or more persons under a right of residence granted under the terms of a will, or
  • By a trustee appointed under a will on trust for some or all of the vested beneficiaries who use and occupy the land as their PPR (provided that this is not a discretionary or unit trust),
  • In accordance with a will, vested in a trustee on trust for a life tenant who uses and occupies the land as their PPR,
  • By a trustee of a special disability trust for the principal beneficiary who uses and occupies the land as their PPR,
  • By the trustee of a fixed trust and occupied as a PPR by a vested beneficiary or beneficiaries

The exemption is not available for land owned by a trustee of a discretionary trust, a unit trust scheme or a liquidator. However, concessionary tax treatment is available for land held by a trustee of a discretionary trust or a unit trust scheme which is occupied by a beneficiary as their PPR, where the trustee nominates a PPR beneficiary.

Apply for the PPR exemption as an eligible trustee

To claim the PPR exemption as an eligible trustee, you must write to us and provide:

  • A copy of the trust deed, or
  • A copy of the will

Can you get a PPR exemption if you have a right to reside under a will or testament?

Where the land is used as a PPR by a natural person who has been granted a right to reside on the land under a will or testamentary instrument, the following requirements must be satisfied for a PPR exemption to apply:

  • Immediately before the person was granted a right to reside on the land, the land was exempt PPR land,
  • The right to reside was not granted or acquired in exchange for monetary consideration, and
  • The person who has the right to reside does not have another PPR (either in Victoria or elsewhere)

Apply for the PPR exemption if you have a right to reside under a will or testament

If you wish to claim the PPR exemption because you live on the land under a right to reside, you must apply in writing and provide a copy of the will or testamentary instrument.

Changes in ownership

A PPR exemption may be affected when a PPR is sold or its owner changes.

Purchase of new PPR

An additional PPR exemption is available where an individual owner or eligible trustee purchases new land that is intended to be used as a PPR in the year before the assessment year, but, as at 31 December of that year before the assessment year, the individual owner or resident vested beneficiary has not yet moved out of their existing PPR.

In these circumstances, both the new PPR and old PPR will also be exempt from land tax. However, for a dual PPR exemption to apply the owner or trustee cannot derive any income from the new PPR at any time when it is not occupied as the PPR of the individual owner or resident vested beneficiary.

This additional exemption may be revoked if the individual owner or resident vested beneficiary does not move into the new PPR within 12 months of the purchase of the new PPR and use the new land as their PPR for at least six continuous months.

Sale of old PPR

An additional PPR exemption is available where an individual owner or resident vested beneficiary has moved into a new PPR but, as at 31 December of the year before the assessment year, the individual owner or eligible trustee still owned the old PPR.

In these circumstances, both the old and new PPR will receive an exemption even though the old PPR is no longer being used as a PPR.

However, for a dual PPR exemption to apply the individual owner or trustee cannot derive any income from the old PPR land at any time when it is not occupied as the PPR of the individual owner or resident vested beneficiary. This additional exemption may be revoked if the old PPR has not been sold by the end of the assessment year for which the exemption is granted.

Apply for a dual PPR exemption

If you wish to claim a dual PPR exemption for the transition between one PPR and another, please call us on 13 21 61 and provide:

  • The relevant date that you ceased occupying the previous PPR and commenced occupation of the new PPR, and
  • The date of purchase of the new PPR

Deceased estates, life tenancies and right to reside

Death of owner or beneficiary using land as PPR

Where the individual owner or the resident vested beneficiary who was using the land as their PPR has passed away, the PPR exemption will continue to apply to that land until the earlier of:

  • Three years after the death of the individual owner or resident vested beneficiary,
  • The interest of the individual owner or resident vested beneficiary is given to another person under a trust, or
  • The land is sold or transferred to a new owner

Please note that this exemption is not available if the land is rented out following the death of the former owner or resident.

Apply for a PPR exemption on a deceased estate

If you wish to claim an exemption for a property which was the PPR of a person who is now deceased, or a person who has been granted a life tenancy or right to reside* by device of a will or testamentary instrument who is now deceased, you must write to us and provide:

  • The date of death of the owner,
  • A copy of the will or testamentary instrument detailing the life tenancy or right to reside (if applicable),
  • A completed Deceased estate - Commencement or completion of administration (LTX-Trust-18) (if applicable and not already lodged), and
  • The date on which the deceased person’s interest in the land was vested in another person under a trust (if applicable)

Please note that a PPR exemption cannot be applied to a right to reside where the right was granted for monetary consideration.

How does the PPR exemption apply to changes in use?

When a person changes the way they use their PPR, their eligibility for the exemption is affected.

Absences from PPR

A PPR exemption may be granted where the individual owner or resident vested beneficiary is temporarily absent from their PPR. This may be due, for example, to the owner working interstate or overseas.

For this exemption to apply for a given assessment year, the owner must have either obtained a PPR exemption or used the property as their PPR for at least six consecutive months immediately before the absence and must satisfy us that the:

  • Absence is only temporary,
  • Individual owner or resident vested beneficiary intends to resume occupation of the PPR after the absence,
  • Individual owner or eligible trustee is not entitled to receive another PPR exemption in Victoria or elsewhere during the temporary absence of that individual owner or the resident vested beneficiary, and
  • Rental requirement is satisfied

Prior to the 2013 assessment year, the rental requirement is satisfied if the owner or trustee did not rent out the land for six consecutive months or more in the assessment year during the period of absence.

From the 2013 assessment year onwards, the rental requirement is satisfied if the owner or trustee did not rent out the land for six months or more in the year before the assessment year during the period of absence.

This PPR exemption is limited to six years from the date the absence started.

Apply for an exemption where the owner is absent from the PPR

If you wish to claim the exemption for a property that was previously your PPR, but from which you are currently absent, you must write to us and provide:

  • The date which you originally commenced occupying the property as your PPR,
  • The date the absence from the PPR commenced,
  • The reason for your absence,
  • Details regarding your intention to reoccupy the property as your PPR, and
  • Any rental income derived from the property during your absence

Individuals who have lost the ability to live independently

The PPR exemption is available where the individual owner or resident vested beneficiary is absent from their PPR because they can no longer live independently in their PPR, require full-time care and so reside:

  • In a hospital as a patient of the hospital,
  • In a residential care facility, supported residential service or a residential service for people with disabilities, or
  • With a carer who provides care to the individual owner or resident vested beneficiary on a daily basis

Please note, this exemption is not available if the individual owner or trustee rents out the land for six months or more in the year before the tax year, for all relevant years being claimed.

Owners unable to live independently

If you wish to claim this exemption, you must write to us and provide:

  • Date which the owner or resident originally commenced occupying the property as their PPR,
  • Date the absence from the PPR commenced,
  • Reason for owner or resident’s absence,
  • If the owner or resident has moved into a hospital or residential care facility or service, the details of this facility and evidence of their admissions into this facility, or
  • If the owner or resident has moved with a carer, the health details of the owner or resident and the details of the arrangement, including the assistance provided by the carer

PPR land that becomes unfit for occupation

Where land being used as a PPR becomes unfit for occupation due to damage or destruction caused by a natural disaster (such as a fire, earthquake, or storm), accident or malicious damage, the PPR exemption will continue as if the individual owner or resident vested beneficiary still uses and occupies the land as their PPR.

The exemption is available for up to two years after the date on which the land becomes unfit for occupation as a PPR. This period may be extended for an additional two years if the Commissioner is satisfied there has been an acceptable delay beyond the control of the individual owner or eligible trustee.

A PPR exemption for land that is unfit for occupation is not available if other land owned by the individual owner or eligible trustee becomes eligible for the PPR exemption.

Apply for an exemption where the PPR is unfit for occupation

If you wish to claim this exemption, you must write to us and provide:

  • Details of the event which led to your PPR becoming unfit for occupation, and
  • Any documents which evidence the situation, for example, insurance assessments

Unoccupied land subsequently used as a PPR

Where a landowner is unable to occupy land as their PPR because a residence was being built or renovated on it, he or she is required to pay land tax whilst it is unoccupied.

The landowner may, however, apply for a refund of tax paid for the year in which they started or resumed using and occupying the land as their PPR for six continuous months. Similarly, a trustee of an eligible trust may apply for a refund of land tax paid for the year in which a vested beneficiary started or resumed using and occupying the land as their PPR for six continuous months (in accordance with the proportion of their beneficial interest in the land).

Any application for a refund must be made before 31 December of the year after the year the landowner or resident vested beneficiary started or resumed using the land as their PPR.

A refund of tax paid may also be available of up to an additional three years back. To qualify for a refund for the first prior year, the landowner or trustee must not have been eligible for a PPR exemption on any other land during that year. The refund may be extended for up to a further two years back if the landowner or trustee was not eligible for a PPR exemption on any other land during those years and the Commissioner is satisfied there was an acceptable delay in the commencement or completion of building work which was beyond the control of the landowner. This is intended to cover delays caused by unexpected events, planning delays, damage or destruction.

No refund is payable if the landowner or trustee derived income from the unoccupied land during any year where a refund is being claimed. Further, if the property was being renovated, the renovations must be so substantial that the landowner or beneficiary could not live in the property during the works. 

Apply for an exemption where unoccupied land is subsequently used as a PPR

If you wish to claim this exemption, you must write to us and provide copies of:

  • The occupancy certificate for the property, and
  • A utility notice issued to the owner/s at and for the address

When is a partial PPR exemption available?

Partial exemption if land is used for business purposes

Where a substantial business activity is conducted on the land being used as a PPR, an exemption will only apply to the portion of the land is used for residential purposes by the individual owner, resident vested beneficiary or the person with the right to reside.

The apportionment is to be based on either floor space of a building or land area.

If this is not considered to be appropriate, another method agreed to by the Commissioner and the landowner may be used. The Commissioner may consult with the Valuer-General if an agreement cannot be reached.

Apply for a partial PPR exemption where land is used for business purposes

If you wish to claim an exemption for a PPR where part of the land is used for business purposes, you must write to us and provide:

  • Total area of the property and the area used exclusively for business purposes,
  • Total annual income derived from the business activity,
  • Total number of paid employees employed by the business (excluding family members), and
  • Date the business activity was commenced on the property

Partial exemption if separate residence on PPR land is leased

If the PPR land contains a separate residence, such as a granny flat or bungalow, which is leased to a residential tenant, the PPR land will only be exempt to the extent that the land is used for residential purposes by the individual owner, resident beneficiary or the person with the right to reside.

Land tax is assessable on the portion of land that has been leased for residential purposes. The apportionment is based on the land area.

Apply for a partial PPR exemption where a separate residence is leased

If you wish to claim an exemption for a PPR where a separate residence on the land is leased, you must write to us and provide:

  • Details of the land,
  • If the land is contained under more than title, those title details,
  • Details of the separate residence, and
  • Details of lease

Partial exemption or refund for trustees

Where only some of the vested beneficiaries of the trust reside at the PPR land, an exemption or refund will be limited to the proportion of the land in which the resident vested beneficiary has an interest.

For example, if there are two vested beneficiaries with an equal interest in the land under a fixed trust and only one of them resides at the land, then only half of the value of the land would be exempt from land tax.

Apply as a trustee for a partial exemption or refund for resident vested beneficiary

If the trustee has notified us both that they hold the land for a fixed trust and for who (i.e. have notified us of the beneficiaries), they need to write to us and provide details of the PPR use of the land.

If trustee has not yet notified us that they hold land on trust, they must first do and and notify us of the beneficial interests before they can claim a partial PPR exemption.

Joint owners

Joint owners are ordinarily assessed for land tax in three stages:

  1. Primary assessment (joint ownership)
    The joint ownership is assessed for land tax on all their jointly owned land.
  2. Secondary assessment (individual ownership)
    Each member of the joint ownership is separately assessed for all land in which they have an interest. This includes their interest in the jointly owned land and any other taxable land they own either alone or with others.
  3. Deduction to prevent double taxation (joint ownership deduction)
    A deduction is applied to the individual’s assessment (secondary assessment) to avoid double taxation of their share in jointly owned land.

If the jointly owned land is used as the PPR by at least one of the joint owners, a joint ownership assessment (primary assessment) will not be issued for the land.

Each joint owner who does not occupy the jointly owned land as their PPR will be, however, individually assessed on their share of that land and combined with any other land they own.

If no joint ownership assessment is issued for a particular property, there will be no joint ownership deduction in respect of it.