What is this new Vacancy Tax? – it is a tax on residential properties in the inner and middle suburbs of Melbourne* (Specified Geographic Areas) which are deemed to be vacant. This tax will be in addition to existing Land Tax.

What is meant by “Vacant”? – a property will be considered vacant unless it was occupied for more than six months (whether continuous or in aggregate) in the preceding calendar year by:

(i)               The owner as the owner’s principal place of residence; or

(ii)              The owner’s permitted occupant as their principal place of residence or a natural person under a genuine lease or short term letting arrangement. 

Note: if your nominated principal place of residence for Land Tax purposes is another property, your property will be deemed to be vacant unless (ii) applies.

How much is the Vacancy Tax?it will be calculated at 1% of the capital improved value (CIV) of your property – i.e. the value of land and buildings. For example, if the CIV of your property is $2,000,000, the Vacancy Tax will be $20,000.

What exemptions are applicable? – the Vacancy Tax may not apply to the following properties:

       Holiday homes – provided it is a genuine holiday home and occupied as such for at least four weeks per year;

       Properties used for work purposes – provided that the property is occupied for an aggregate period of at least 140 days in the year for the purpose of attending the owner’s place of business or employment which must be within the Specified Geographic Areas; and

       Properties transferred during the previous year. 

How will the State Revenue Office (SRO) know if you have Vacant Property?if you own vacant residential property (as defined above) within the Specified Geographic Areas, regardless of whether you claim an exemption, you must notify the SRO by 15 January each year or risk being subject to penalty tax. 

These changes are of particular relevance to persons who:

(i)               own a residential property in Melbourne but who have nominated another property as their principal place of residence for Land Tax purposes;

(ii)              travel overseas for more than six months without letting their premises; and

(iii)            are developing/renovating an existing residential property over a period greater than 2 years.

*Specified Geographic Areas means the following City Councils:

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

To find out more about whether your property is affected by these changes please contact us on 03 9864 8444.