Melbourne’s current property market has led the Victorian government to consider extending the land tax framework to impose a tax on vacant properties in the inner and middle areas of Melbourne.
A recent fact sheet released by the Victorian State Government indicates that a Vacant Residential Property Tax equivalent to 1% on the ‘capital improved value of the taxable property’ is being considered on properties that are not available for rent or purchase within certain Melbourne suburbs.
Owners of properties that are vacant for more than 6 months will be liable to pay 1% on the capital improved value of the taxable property (which is displayed on a homeowner’s rates notice and determined as part of the council’s valuation process) and will be required to self-assess their liability. This means that property owners are required to inform the State Revenue Office (SRO) when their property becomes liable by being vacant for 6 months – but the SRO states that it “will also undertake monitoring and compliance activities”.
A number of practical exemptions will be applied to recognise those properties with legitimate reasons for vacancy including holiday homes, city units required for work purposes, deceased estates and homes owned by Victorians who are temporarily overseas.
The Vacant Residential Property Tax will be incorporated into the current Victorian Land Tax framework and intended to apply from 1 January 2018. Consultations with industry bodies are currently in process.
We will continue to keep you updated on future developments.