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Key Update for Holiday Home Owners: VRLT

Victorian Vacant Residential Land Tax Overview

The Vacant Residential Land Tax (VRLT) now applies statewide as of 2024. Residential properties not used or occupied for more than six months during the 2024 calendar year may be subject to VRLT.

What is the VRLT?

The VRLT is an additional tax, calculated as a percentage of the property’s Capital Improved Value (CIV):

  • 1% of CIV for the first year of vacancy
  • 2% of CIV for the second consecutive year
  • 3% of CIV for the third consecutive year
 

Example Calculation: For a property with a $1,250,000 CIV the LVRT on the 1st year would be $12,500, followed by $25,000 and $32,500 for the second and third consecutive vacant years. This is in addition to land tax.

When is a Property Considered Vacant?

A property is considered vacant if it is not used and occupied for at least 6 months (183 days) during the calendar year. Occupation criteria include:

  • Use as the owner’s or occupier’s principal residence.
  • Occupation under a lease or short-term letting arrangement.
 

Key Notes:

  • Occupation does not need to be continuous.
  • Merely being available for rent does not qualify as use.
 

Illustrative Examples:

  • A property rented intermittently on Airbnb for over 6 months is exempt.
  • A property listed on Airbnb but occupied for only 15 weeks is considered vacant, unless it qualifies for a holiday home exemption.
 

Key Exemptions

  1. Exempt from Land Tax: Automatically exempt from VRLT.
  2. Business Use: Properties used as a place of work for at least 140 days annually, where the owner has a separate principal residence.
  3. Holiday Home: One holiday home per landowner may qualify if:
    • It is owned by the same person as their principal residence.
    • It is used as a holiday home for at least 28 days during the year.
 

Exemptions for Trusts and Companies

Exemptions depend on property acquisition date and usage:

  • Before 28 November 2023: Trusts and companies may claim business use or holiday home exemptions for use by specified individuals.
  • After 28 November 2023: Properties are ineligible for these exemptions, making VRLT a critical consideration for ownership structures.
 

Landowner Obligations

Landowners must notify the State Revenue Office (SRO) via the online portal by 15 January 2025 if a property is:

  • Vacant during 2024; or
  • Vacant but qualifies for an exemption.
 

Key Notes:

  • No notification is required if the property is not vacant (e.g., leased all year).
  • Failure to notify may result in penalties.
 

Key Takeaway

Landowners should assess property usage to determine VRLT liability and ensure timely reporting. For advice, please contact C&H Accounting on enquiries@chcpas.com.au or (03) 9431 1420.

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