December 2024
Do you own a residential property that was vacant for 6 months or more in the 2024 calendar year?
If the answer is Yes, you must notify the State Revenue Office by 15 January 2025!
What Is the Vacant Residential Land Tax (VRLT)?
The Vacant Residential Land Tax (VRLT) is a levy introduced by the Victorian Government in 2018. Its primary aim is to address housing availability by discouraging owners from leaving residential properties unoccupied for extended periods.
This tax has historically applied to properties in Melbourne’s inner and middle suburbs that remain vacant for more than six months in the preceding calendar year. However, from 1 January 2025, significant changes will take effect, expanding its scope statewide and altering the tax structure.
Key Changes Effective from 1 January 2025
Statewide Application – VRLT will no longer be limited to Melbourne’s suburbs. From 2025, it will apply to vacant residential properties across all of Victoria.
Progressive Tax Rates – the tax rate will increase based on the consecutive years a property remains vacant:
- 1% of the Capital Improved Value (CIV) for the first year.
- 2% of the CIV for the second consecutive year.
- 3% of the CIV for the third consecutive year and beyond.
Expanded exemptions
- Holiday Home Exemption: Properties used for at least four weeks annually by the owner or a close relative. A company or trust is only eligible for this exemption if they have continuously owned the home since 28 November 2023
- Work Accommodation Exemption: Properties occupied for at least 140 days annually for work purposes.
- Properties Under Construction or Renovation: Exempt for up to two years (with extensions available for unavoidable delays).
What should you do if you are impacted?
If you own residential property in Victoria, you need to:
- Review Your Properties – Identify if any properties under your ownership that were vacant for more than six months in the preceding calendar year.
- Notify the State Revenue Office (SRO) – You must notify the SRO via their online portal by 15 January each year. This includes:
– Reporting vacant properties.
– Applying for relevant exemptions (e.g., holiday home or work accommodation).
– Updating contact details or ownership information. - Ensure Compliance – Late notifications or failure to notify the SRO can result in penalties under the Taxation Administration Act 1997 and accrued interest on unpaid amounts.
Why Is This Important?
The expanded VRLT is a significant change that may affect many property owners who were previously exempt. It’s critical to take action to avoid unexpected tax liabilities and penalties.
For further details in relation to the tax and access to the SRO online portal please visit: https://www.sro.vic.gov.au/vacant-residential-land-tax
If you need any further assistance please do not hesitate to contact us.
Damian James, Partner – Specialising in corporate taxation, taxation of complex family groups, financial risk management, and business strategy.