Land Tax changes 2025

Vacant residential land tax effective 01st January 2025

As has been in the news in recent times, Vacant residential land tax only applies to residential properties in inner and middle Melbourne that were vacant for 6 months or more in the previous calendar year. The Victorian Government introduced vacant residential land tax (VRLT) from 1 January 2018 to help address the lack of housing supply in Victoria. VRLT is assessed by calendar year (1 January to 31 December) and the owner of the property is liable for it.

From 1 January 2025, vacant residential land tax will be expanded to apply to all vacant residential properties in Victoria. Properties which are exempt from land tax are not liable for vacant residential land tax.

VRLT may apply to:

• residential land with an existing home on it that is vacant for more than 6 months in the calendar year preceding the tax year
• residential land with a home on it that has been under construction or renovation for 2 years or more
• residential land with a home on it that has been uninhabitable for 2 years or more.

However, a property which is exempt from vacant residential land tax may be liable for land tax. Prior to 1 January 2025, it only applied to vacant residential land designated municipalities in inner and middle Melbourne.

VRLT will apply where the land is vacant for more than 6 months in the preceding calendar year.

An exemption applies to a property used and occupied by the owner or a vested beneficiary of the trust to which the land is subject as their holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year.

To qualify for this exemption, the owner or vested beneficiary must also have a principal place of residence (home) in Australia in addition to their holiday home, but they do not have to own that home.

However, a property owner can only claim the Holiday Home Exemption for 1 property in Victoria. If you own 2 holiday homes that are used for more than 4 weeks, you can only claim the exemption for 1 of these properties.

In addition to the Holiday Home Exemption, we understand that there is an exemption being sought and under consideration, which will exempt properties in Alpine Resorts from this tax.

The rate of VRLT is based on the number of consecutive tax years the land has been liable for VRLT and is:

• 1% of the CIV of the land for the first year the land is liable for VRLT where the land was not liable for VRLT in the preceding tax year.

• 2% of the CIV of the land where the land is liable for VRLT for a second consecutive year.

• 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year.

Please take note of this and action, if not already taken as follows:

1. If you own a property that has been vacant for more than 6 months, you must notify the State Revenue Office by 15 January 2025. This must be done even if you are claiming an exemption

2. If you are entitled to The Holiday Home Exemption, you must make a notification to claim the exemption to the State Revenue Office by 15 January 2025.

These notifications are to be made via the State Revenue Office online portal.

Further information regarding this tax and the link to the online portal can be found on the State Revenue Office website at https://www.sro.vic.gov.au/vacant-residential-land-tax

For further assistance in this matter, please feel free to contact your team member at RCB Advisors by phone 03 9882 0533.