Anyone intending to buy a property, particularly for investment purposes, needs to be aware of the new Victorian Residential Property Tax (Vacancy Tax) that comes into force on 1 January 2018, according to Parke Lawyers Managing Director Jim Parke.

Mr Parke warns owners of any properties around inner and middle Melbourne that are vacant for six months or more will have to pay the Vacancy Tax.

The new tax will be charged at 1% of the Capital Improved Value on properties in 16 council areas in Melbourne. It will be in addition to land tax and council rates.

The tax will apply to all properties in the designated areas, including land on which a home is being renovated or where a former residence has been demolished and a new home is being constructed.