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Vacant Property and Holiday Home Tax - Beware!

Published by Lily Cox:

As of 1 January 2025, a new Tax will apply to any vacant residential land throughout Victoria. This has been extended from the inner-city and middle ring suburbs of Melbourne to all areas of Victoria.

The Vacant Residential Land Tax (VRLT) is an annual tax, in addition to any general land tax. Residential land that has been vacant for more than 6 months is subject to this tax. Where the land is vacant for 1 year, it is charged at a rate of 1% of the capital improved value of vacant residential land. Where the land remains vacant after the first year, the amount of tax increases in subsequent years. If it remains vacant for 2 consecutive years, the rate increases to 2% and if it is vacant for 3 or more years, it is increased to 3%.

An exemption may apply where the land is being used and occupied as a holiday home for at least 4 weeks of the year. For this to apply the owner must have used and occupied other land in Australia as a principal place of residence (PPR) and the owner or a relative must use the holiday home for at least 4 weeks of the year. The location of the land, distance between owner’s principal place of residence and their holiday home as well as nature and frequency of any use of the land is considered by the Commissioner in this examining applications for this exemption.

If the vacant property or holiday home is not owned in your personal name (for instance if it is owned by a company or trust) special rules apply if you wish to obtain the exemption.

We recommend that if you own a holiday home or another property that is often vacant, you keep a log-book to record the use and occupation of the land.

At this stage the tax will be implemented via owners self-reporting or by being reported by a ‘helpful’ neighbour!

This is set to have big changes on owners of residential vacant land and it is important that you are aware of the changes and what requirements are needed for the relevant exemptions.

Do you have questions? Book an appointment at one of our offices to discuss how this could affect you.


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