Vacant Residential Property. The cost of keeping it empty went up!
Vacant Residential Land Tax isn’t a new concept in Victoria. Vacant Residential Land Tax (VRLT) was first introduced in Victoria on 1 January 2018 and applied only to vacant residential land in inner and middle Melbourne. But as of 1 January 2025, the Victorian Government has extended the realm and now VRLT applies to all residential land anywhere in Victoria if the land was vacant in the preceding calendar year.
The SRO provides that residential land is considered to be vacant if:
- in the case of a home capable of being used for residential purposes, it is not occupied for 6 months or more in the preceding calendar year.
- in the case of a home that is under construction or renovation, if it has been more than 2 years since the building permit was issued.
- in the case of a home that is unhabitable, if it has been unhabitable for 2 years or more.
VRLT will be calculated on the capital improved value (CIV) of the Property. A property’s CIV is listed on your council rates notice and is reflective of the value of the land, buildings and any other capital improvements made to the property. A progressive rate of VRLT will also apply from 1 January 2025. Meaning that VRLT will be charged as follows:
- 1% of the CIV of the land for the first year the land is liable for VRLT where the land was not liable for VRLT in the preceding tax year;
- 2% of the CIV of the land where the land is liable for VRLT for a second consecutive year; and
- 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year.
There are exemptions from VRLT, these are as follows:
- If you are exempt from paying land tax – you are exempt from the VRLT.
- If a property changes ownership during a calendar year will then be exempt the following year for VRLT.
- Where a property becomes residential land:
- Land that becomes residential land during a calendar year will then be exempt the following year for VRLT. This exemption can be extended for up to 2 years provided the ownership hasn’t changed.
- The 2 year exemption mentioned above can be extended for an additional year, provided the land was still vacant, did not change ownership, and the owner has made genuine and reasonable effort to sell the property during the 3 year period
- Holiday Homes
- An exemption applies to a property used and occupied by the owner (or close relative) or a vested beneficiary of the trust to which the land is subject as their holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year.
- If you have more than one holiday home, you can only claim the VLRT for one of the holiday homes.
- Work accommodation Homes
- For this exemption to apply, the property must be occupied by the owner or a vested beneficiary for at least 140 days (continuous or aggregate), the owner must have a principal place of residence in Australia and the workplace must be in Victoria.
We note that there are strict deadlines on when you must notify the SRO if your property is vacant, or an exemption applies. If you are uncertain whether this applies to you, please reach out to our property team so that we can assist.
Disclaimer
The above does not constitute legal advice, but is information which may be of general interest. Tisher Liner FC Law will not be held liable or responsible for any claim, which is made as a result of any person relying upon the information contained in this publication.
