The new Victorian Residential Property Tax (Vacancy Tax) throws more complexity into the property ownership maze, particularly for owners of investment property or those considering investing, according to Parke Lawyers.
The Melbourne-based law practice says the optimal way to understand the new requirements and the exemptions that apply is to seek legal advice specific to your situation.
The Vacancy Tax comes into force on 1 January 2018, and will be administered by the State Revenue Office as part of the annual land tax process.
Owners of any properties around inner and middle Melbourne that are vacant for six months or more will have to pay the new tax, which will be charged at 1% of the Capital Improved Value (CIV) on properties. This will be in addition to land tax and council rates.
The CIV of a property is the value of land and buildings as determined by the general valuation process. It is displayed on the owner’s council rates notice.
Parke Lawyers Managing Director Jim Parke says the Vacancy Tax is assessed by calendar year and the six months do not need to be continuous.
“On property valued at $1.2 million, for example, the Vacancy Tax will be $12,000,” Mr Parke says.
The tax will apply to all properties in 16 council areas of Melbourne, including land on which a home is being renovated or where a former residence has been demolished and a new home is being constructed.
The council areas are Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonington, Whitehorse and Y