As of 1 January 2018, the Vacant Residential Property Tax (VRPT), also known as “ghost tax”, will be imposed on dwellings vacant for more than a total of six (6) months in a calendar year.

New property laws: Are you liable to pay “ghost tax”?

As of 1 January 2018, the Vacant Residential Property Tax (VRPT), also known as “ghost tax”, will be imposed on dwellings vacant for more than a total of six (6) months in a calendar year.

The new proposed tax will be self-reporting, that is, owners of vacant residential property will be required to notify the State Revenue Office (SRO) of any vacant properties that they own by 15 January each year via the SRO online portal. The VRPT will apply annually at a rate of 1% for the property’s capital improved value (CIV) and is payable on a calendar-year basis, as with land tax. For example, if the taxable land has a CIV of $500,000, the tax will be $5,000.

The property will be considered vacant if it was unoccupied for more than six (6) months in the preceding calendar
year by:

  • The owner, or the owner’s permitted occupier, as their principal place of residence; or
  • A person under a lease or short-term letting arrangement.

The six (6) months does not need to be continuous and will apply from 1 January 2018, based on use and occupation in the preceding year.

Please note the VRPT is only applicable in the following council regions:

  • City of Banyule;
  • City of Bayside;
  • City of Boroondara;
  • City of Darebin;
  • City of Glen Eira;
  • City of Hobsons Bay;
  • City of Manningham;
  • City of Melbourne;
  • City of Monash;
  • Monee Valley City Council;
  • Port Phillip City Council;
  • Stonnington City Council;
  • Whitehorse City Council; and
  • Yarra City Council.

The VRPT does have specific exemptions, including holiday homes (owned by those with a principal place of residence in Australia), a city unit for work purposes, properties in deceased estates and homes subject to legitimate temporary absences (e.g. medical care, overseas appointments).

Absentee Owner Surcharge

If you are an “absentee owner” (a natural person absentee, absentee corporation or absentee trust) as at 31 December of the preceding year, you are liable to pay an absentee owner surcharge, which is 1.5% calculated on the total taxable value of Victorian land you own and will be included in your land tax assessment, which will be provided to you by the State Revenue Office. Depending on how and who owns the land, the surcharge may also apply to jointly owned land.

For more information or clarification on the new reforms, contact DE today for a full and frank discussion.

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