Vacant Residential Land Tax

From 1 January 2018, a vacant residential land tax may apply to homes in the following municipal councils;
  • Banyule
  • Melbourne
  • Bayside
  • Monash
  • Boroondara
  • Moonee Valley
  • Darebin
  • Moreland
  • Glen Eira
  • Port Phillip
  • Hobsons Bay
  • Stonnington
  • Manningham
  • Whitehorse
  • Maribyrnong
  • Yarra
The tax applies where properties were vacant for more than six months in the preceding calendar year. This tax is different to land tax, the absentee owner surcharge and the federal annual vacancy fee. 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. This is an annual tax set at 1 per cent of the capital improved value (CIV) of taxable land.


 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 does not include vacant land, commercial residential premises, display homes, 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.

 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 (Homes owned by businesses or trusts are not eligible for this exemption)
The property is occupied by the owner for at least 140 days of the preceding calendar year for the purpose of attending their workplace (Homes owned by businesses or trusts are not eligible for this exemption)

 Construction and renovation

 Homes will not be considered vacant for up to two years from the date a building permit for construction or renovation was issued. The Commissioner of State Revenue can extend this period under certain circumstances. You do not need to notify the SRO about such property.

 Notification requirements

 If you own a property that was unoccupied for more than six months during 2017, you were required to notify us about the property by 15 January 2018.
By Ian Cimino
Principal Lawyer
Prompt Legal Services
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