Key Updates to Victoria’s Vacancy Residential Land Tax: What Property Owners Need to Know

The Vacancy Residential Land Tax (VRLT) in Victoria has undergone significant revisions that all property owners should be aware of. These changes are crucial for managing your residential properties effectively and avoiding unnecessary tax burdens.

Firstly, the VRLT now applies to all residential land throughout Victoria, marking a substantial expansion in its scope. Importantly, the basis for the tax calculation has shifted from the land value to the capital improved value of the property. This alteration could affect the tax amount for many properties, potentially increasing the financial impact on owners.

A critical compliance deadline is set for July 1, 2024. Properties that have remained unoccupied since the beginning of 2024 must be occupied for at least six months within this calendar year. Failure to meet this occupancy requirement will result in the application of the VRLT, unless a valid exemption applies.

Regarding exemptions, there is notable news for holiday home owners. An exemption for one vacant property can still be obtained if certain conditions are met: the property must have been used as a holiday home for a minimum of four weeks in the year—this can be either a continuous period or an aggregate. Additionally, the owner or a vested beneficiary must use another property in Australia as their primary residence.

However, there are limitations for properties held under certain trust structures or by companies. Specifically, residential properties owned by companies and discretionary trusts—or any trust arrangement without a vested beneficiary—will not qualify for the four-week holiday home exemption.

These updates necessitate careful consideration, especially for those owning multiple properties or holiday homes. Ensuring compliance before the July 1, 2024 deadline is essential to avoid the levy of the VRLT.

If you have any questions about how these changes may impact your property holdings, or need assistance in navigating these new regulations, do not hesitate to reach out for professional advice.