Understanding Vacant Residential Land Tax: What Property Owners Need to Know

The Vacant Residential Land Tax (VRLT) in Victoria, Australia, is expanding from 1 January 2025 to include all vacant residential properties, even in regional areas and those owned by the government or state entities, excluding unimproved or vacant land. Below is a concise breakdown of the updates and how they apply:

Key Changes Starting 1 January 2025

1. Expanded Scope:
   • Applies to all vacant residential properties across Victoria, including regional areas and government/state-owned properties.
   • Unimproved land (vacant land) remains excluded.
2. Tax Rates:
   • 1% of the property’s Capital Improved Value (CIV) in the first year of vacancy.
     • Example: A $1,000,000 property incurs a $10,000 tax.
   • Increased rates for consecutive years of vacancy:
     • 2% for the second consecutive year.
     • 3% for the third consecutive year and beyond.

Holiday Home Exemption

• A holiday home is exempt if it is:
  • Used by the owner or eligible family members for at least 4 weeks (28 days) in a calendar year.
  • Owned by someone whose principal place of residence (PPR) is in Australia.

Eligible Family Members (from 1 January 2025):

• Spouse/domestic partner.
• Children and their partners.
• Siblings and their partners and children.
• Parents, grandparents, and grandchildren.

Key Points:

• Friends’ usage does not count towards the 4-week requirement.
• Usage can be cumulative (doesn’t need to be continuous).
• Exemption requires application by 15 January 2025 for the 2024 calendar year.

Other Exemptions

1. Ownership Change:
   • The property changed ownership during the year.
2. New Residential Property:
   • Became a residential property during the year or in the preceding two years, with ownership unchanged.
3. Workplace Occupation Exemption:
   • The owner occupied the property for 140+ days in the year due to work/business and has a PPR in Australia.
   • Not available to properties owned by companies, associations, or organisations.

How to Apply for Exemption

• Applications must be submitted to the Victorian State Revenue Office (SRO) by 15 January 2025 for the 2024 calendar year.
• The application can be made online through the SRO website.

Property Usage Assessment

• Although changes apply from 1 January 2025, the property’s usage in 2024 is assessed to determine exemptions.

Important Notes

• Plan property usage and documentation for 2024 in preparation for the 2025 requirements.
• Ensure eligible family members’ usage is documented to meet the exemption criteria.

Please contact our office on (03)9848 5933 if you have any questions or concerns regarding your property investments and responsibilities.

Source: State Revenue Office Victoria