The Vacant Residential Land Tax (VRLT), subject to a few exemptions, currently applies to residential properties that are empty for more than 6 months in a calendar year. The current VRLT applies to the inner and middle suburbs of Melbourne in listed Council areas.
From 1 January 2025, new legislation extends the geographical reach of the VRLT in Victoria to include regional areas of Victoria.
This change in the legislation may subject a number of our client’s holiday houses or regional land holdings to the VRLT, and we encourage our clients to seek advice from an appropriately qualified lawyer.
Holiday Home Exemptions
From 1 January 2025, the holiday home exemption will apply to properties that are used and occupied as a holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year. An owner will only be able to claim one holiday home exemption in a calendar year.
Use of the holiday home by close relatives of the owner will also count towards the 4-week requirement. Use of the property by friends will not count towards the 4-week requirement.
To be eligible for this exemption the owner must also have a principal place of residence (home) in Australia in addition to the holiday home noting that they do not need to own their principal residence.
Other Exemptions
There is a limited range of other exemptions and the criteria for these must be reviewed in detail to determine applicability.
What is the Rate of VRLT?
From 1 January 2025, the VRLT is calculated on the capital improved value (CIV) of taxable land which would be displayed on the council rates notice.
The rate of VRLT is based on the number of consecutive tax years the land has been liable for VRLT and is:
- 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
- 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year.
Notification Requirements
Owners of land with a vacant residential property are required to notify the State Revenue Office (SRO) by 15 January each year via an online portal. If a property is eligible for an exemption, the land owner is still required to notify the SRO and apply for the exemption via the same portal.
Further Information
For more details, please refer to the State Revenue Office website: https://www.sro.vic.gov.au/vacant-residential-land-tax
Please note:
1) This blog is not intended for the purpose of giving legal advice. We recommend you seek advice from a suitably qualified lawyer.
2) Our comments are general in nature and may/may not apply to your specific circumstances. Please seek our specific advice, from a suitably qualified lawyer, in relation to your own circumstances.
Kind Regards,
Eric Cirulis
Director/CEO