There have been changes made to the Vacant Land Tax Legislation that ALL property owners need to know about!
Currently residential property in inner and middle Melbourne in 16 municipalities are subject to Vacant Residential Land Tax (VRLT). From 1 January 2025 VRLT will apply to residential land across ALL of Victoria based on the use of the property from 1 January 2024.
When is Residential Land considered vacant?
Residential Land will be considered vacant if it has not been used or occupied for a continuous or aggregated period of 6 months or more in any given year. It will also be considered to be vacant if the construction or renovation works on the property have not been completed within 2 years.
How much will the land owner be taxed?
The annual VRLT will be 1% of the capital improved value of the taxable land. The VLRT will increase by 1% each year that the property continues to be vacant until it reaches a cap of 3%.
What are my obligations as a landowner if my land was vacant?
You are required to notify the State Revenue Office via the online portal by 15 January each year that the land was vacant in the preceding calendar year. You will also need to make a notification if you believe you are entitled to an exemption.
Will VRLT apply to unimproved residential land?
From 1 January 2026, VRLT will apply to all unimproved residential land in Metropolitan Melbourne that has remained undeveloped for at least 5 years and is capable of residential development unless it is:
- unimproved residential land that is contiguous to a principal place of residence (PPR)
- unimproved land incapable of being used or developed for residential purposes.
How does the VRLT apply to new residential premises?
From 1 January 2025, the VRLT exemption for new residential premises will be extended to allow a maximum exemption period of 3 years, provided the owner has made genuine and reasonable efforts to sell the land. If the property continues to be unoccupied and unsold after this time, the land will be liable for VRLT at the rate of 1% until sold.
Will VRLT apply to my Holiday Home?
As the VRLT has been extended to all of Victoria, many holiday homes fall within the VRLT regime. However, exemptions from VRLT apply to properties used and occupied by the owner or a vested beneficiary of a trust for at least 4 weeks (whether continuous or aggregate) in the calendar year. From 1 January 2025, the VRLT holiday home exemption will be amended to enable the usage and occupancy requirement to be satisfied by a relative of the owner or vested beneficiary. Subject to a couple of conditions and is limited to only 1 holiday home per owner.
What are other conditions for meeting the Holiday Home VRLT exemption?
This exemption is subject to the following conditions:
- The owner or vested beneficiary must have had a different principal place of residence in Australia in the calendar year.
- The Commissioner of State Revenue must be satisfied that the property is a genuine holiday home.
Please note, as this is an exemption you will still need to notify the SRO.
Below is a link to the SRO notification/exemption online portal:
https://www.e-business.sro.vic.gov.au/vacantlandtax/identity
If you would like to know more information about Vacant Residential Land Tax please click on refer to the SRO website via the following link.
https://www.sro.vic.gov.au/vacant-residential-land-tax
Please contact us should you wish to discuss your personal circumstances or have any queries in respect of this matter.
