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From 1 January 2018, a vacant residential land tax applies to homes in inner and middle Melbourne that were vacant for more than six months in the preceding calendar year. This is a new Victorian tax, and is different to land tax, the absentee owner surcharge and the federal annual vacancy charge.

The vacant residential land tax is assessed by calendar year (1 January to 31 December) and the six months do not need to be continuous.

The Victorian Government has introduced this tax to help address the lack of housing supply in Victoria.

 

Where does the tax apply?

Vacant homes in the following municipal council areas may be affected:
Banyule Melbourne
Bayside Monash
Boroondara Moonee Valley
Darebin Moreland
Glen Eira Port Phillip
Hobsons Bay Stonnington
Manningham Whitehorse
Maribyrnong Yarra

How much is the tax?

This is an annual tax set at 1 per cent of the capital improved value (CIV) of taxable land. For example, if a vacant home 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. It is displayed on the owner’s council rates notice.

What is residential property/residential land?

Residential property is land that is able to be used solely or primarily for residential purposes, such as a home or an apartment.

It also includes land on which a residence is being renovated or where a former residence has been demolished and a new residence is being constructed.

It does not include vacant land, commercial residential premises, residential care facilities, supported residential services or a retirement village. 

What does “vacant” mean?

A property is considered vacant if, for more than six months in the preceding calendar year, it has not been lived in by:

  • The owner, or the owner’s permitted occupier, as their principal place of residence (PPR), or
  • A person under a lease or short-term leasing arrangement made in good faith 
    • The occupation does not need to be by the same occupant or for a single continuous period
    • It is not enough that the property is 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

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 leasing arrangement. 

Transitional provisions

As the legislation was only introduced into the Victorian Parliament in May 2017, homes will be considered to have been occupied between 1 January and 30 April 2017. This means, for the 2017 calendar year, homes will only need to be occupied for a further two months between 1 May and 31 December to be considered to have been occupied for more than six months.

Exemptions

Homes that are exempt from land tax are also exempt from vacant residential land tax.

In addition, homes that are unoccupied for more than six months of the preceding calendar year may be exempt from the tax if:

  • Ownership of the property changes during the preceding calendar year
  • The property becomes “residential” property during the preceding calendar year
  • The property is used as a holiday home and occupied by the owner for at least four weeks of the preceding calendar year
  • The property is occupied by the owner for at least 140 days of the preceding calendar year for the purpose of attending their workplace

Use our online tool to determine if you are liable, or read more about these exemptions, including eligibility criteria, in our frequently asked questions.

Are you liable?

Notification requirements

If you own a property that is unoccupied for more than six months during 2017, you must notify us about the property through our online portal by 15 January 2018. The online portal will be available in December 2017.

The portal will also allow owners or their representatives to claim an exemption from the tax, change their contact details, or nominate a representative to receive future correspondence about the tax.

Existing SRO customers will be able to enter their customer information to have their property details pre-populated into the portal, making the notification process quicker.

Tip-offs

Our priority is to help property owners pay the right amount of tax at the right time.

If you suspect that a property owner is not complying with their obligations, you are encouraged to contact us with a tip-off.

More about making a tip-off

Frequently asked questions

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