Vacant Land Tax

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 encourage these owners to make their property available for purchase or rent, allowing Melbourne’s current housing stock to be used efficiently. The tax will apply to the inner and middle areas of Melbourne, where the issue of housing affordability is most pressing.

There will be a number of practical exemptions applied, recognising there are some legitimate reasons for a property being left vacant.

How will vacancy be reported?

The tax will be incorporated into the land tax legislative framework. Consistent with this framework, liability for the vacant residential property tax is self-reporting. That is, property owners are expected to inform the State Revenue Office when their property triggers the tax. The State Revenue Office will also undertake monitoring and compliance activities.

How is the Vacant Residential Property Tax calculated?

The Vacant Residential Property Tax will be a 1 per cent tax on the capital improved value of the taxable property.

The capital improved value of a property is the value of land and buildings as determined every second year as part of the council valuation process. The capital improved value of your property is displayed on your council rates notice.

For example, if the taxable property has a capital improved value of $500,000, the applicable tax will be $5,000.

Who will have to pay the Vacant Residential Property Tax?

The Vacant Residential Property Tax will only apply to the owner of a property that is unoccupied for more than six months within a calendar year.

Are there any exemptions?

There will be a number of practical exemptions applied, recognising there are some legitimate reasons for a property being left vacant.

These include properties used as holiday homes by those with a separate principal place of residence, those who need a city unit for work purposes, deceased estates, and homes owned by Victorians who are temporarily overseas.

Does the Vacant Residential Property Tax apply to all properties in Victoria?

The Vacant Residential Property Tax will only apply to vacant properties located in the inner and middle suburbs of Melbourne. Any vacant properties outside this area will not be subject to the tax. Vacant homes in the following municipal council areas may be affected:

Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse and Yarra.

Note: the information contained on this page is from State Government Victoria website. Please click here to access.