From 1 January 2018, a tax will apply for vacant residential property.
The vacant residential property tax will be a 1 per cent annual tax on the capital improved value (CIV) of the taxable property. The CIV can be found on your council rates notices. Properties will be considered vacant if they are left unoccupied for six months or more in a calendar year. Note the six months do not need to be continuous.
The vacant residential property tax (VRPT) only applies to vacant residential properties located in the following local council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse, Yarra.
The vacant residential property tax will not apply to holiday homes, city units used for work purposes, properties in deceased estates and homes subject to genuine temporary absences such as for medical reasons or for those who are temporarily overseas.
The vacant residential property tax will be self-reporting, this means owners of vacant residential property will be required to notify the State Revenue Office when they meet the requirements of the vacant residential property tax. However the SRO will observe to ensure that vacant residential properties are being declared and it can also be monitored by utility usage.
The VPRT is expected to produce about $80 million in revenue for the government in the next four years.
The main purpose of this tax is to encourage investors to put their vacant property on the rental market or sell it, to reduce the pressure on increasing house prices and rents, push to increase housing affordability and overall aiding Victoria’s housing stock to be more efficient in the long term.