Selected inner and middle ring Melbourne suburbs that have been vacant for six months or more may be subject to a recently introduced tax, effective 1 January 2018.
So, is your property affected? Consider the following questions to help you determine if you are liable for the Victorian Vacant Residential Property Tax.
For the 2018 year did you own a residential property in one of these councils?
If so, was your property vacant for more than 6 months in 2018?
The term ‘Vacant’ refers to properties that were not rented, not lived in as principal residences, not under construction or not nominated holiday homes.
If the answer is yes to both of the above questions, have you notified the State Revenue Office that your property was vacant?
If you have notified the State Revenue Office you will receive an assessment for tax payable of 1% of the capital improved value of your property (for example, a property valued at $500,000 will receive a tax bill for $5,000 and a property with a value of $1,000,000 will receive a bill of $10,000). You will have 60 days from the notice issue to pay the tax due.
If you have not notified the State Revenue Office then you are potentially in default and liable to penalties in addition to the tax payable.
Given this is the first year of this tax being applicable and that there is some complexity to understanding when it may apply, we expect there to still be a high level of unintentional noncompliance with the rules. Anyone who has a property that potentially sat vacant for a 6 month period in 2018 is strongly encouraged to contact us and seek advice as to their obligations immediately to avoid being exposed to additional penalties or investigations.
It is important to note that this tax is not exclusive to properties owned by foreign purchasers and is applicable on all properties in the councils listed above, irrespective of the nationality of the owner(s).