You may have received a notice from the SRO Victoria in the last week or so in relation to the Vacant Residential Land Tax.
If so, here is some information you may find helpful.
Who does it apply to?
The Vacant Residential Land Tax (VRLT) has been in place since 1 January, 2018 for inner and middle Melbourne. From 1st January, 2025, this now extends to property anywhere in Victoria for the 2024 calendar year.
Therefore, if any of the following applies in 2024, you may be liable for VRLT;
- residential land, with an existing home that has been vacant for more than 6 months
- residential land with a home that has been under construction for more than 2 years
- residential land with a home that has been uninhabitable for more than 2 years
It is the first point that may affect a number of people with holiday homes, in particular those outside the metropolitan area
What is meant by vacant?
Land with an existing home on it is considered vacant unless it was occupied for more than 6 months by;
- The owner, or owner’s permitted occupant as principal place of residence
- a person under a lease or short-term letting arrangement
How much is VRLT?
The amount you need to pay will depend upon how long it has been liable for VRLT.
You will need to find the rates notice for the applicable property as the value is based upon the Capital Improved Value (CIV) listed on the rates notice. However, the following rates apply;
- 1% of CIV if property was not liable for the previous year
- 2% of CIV if property has been liable for two consecutive years
- 3% of CIV if property has been liable for three consecutive years
Holiday Home Exemption
An exemption applies to a property that is used as a holiday home for at least 4 weeks (whether continuous or aggregate) in the calendar year.
To qualify for the exemption, you need to;
- have a principal place of residence in Australia
- have used the property as a holiday home for at least 4 weeks of the year
- the Commission of State Revenue must be genuinely satisfied that it is a holiday home (eg location and distance from principal residence, frequency and nature of it’s use)
Example
Bob owns a holiday home in Dromana that he uses in summer and let’s his kids and grandkids use over various weekends.
The rates notice states that the capital improved value is $600,000
The following applies;
- It is not Bob’s place of principal residence
- There is no lease in place
- The property was only liable for VRLT in 2024 due to the change in rules
- It was not used for four weeks of the calendar year
Therefore, Bob will need to pay $6,000 in VRLT
What do I do now?
- If you are unsure whether you need to pay VRLT, please contact our office to discuss.
- There are a number of definitions and questions that may be considered, in particular if you have already notified or paid VRLT
- If you are liable, you need to log in to the SRO portal and notify them by 15th January, 2025
If you have any questions, please contact Financial Planning by Design on 1300 014 368 or via email – info@fpbydesign.com.au
