When it comes to property and taxes, change is the only certainty. There have recently been a few major changes introduced that relate to property in Victoria. These changes impact both owner occupiers and property investors.
Two major changes in a nutshell are as follows:
Let’s take a closer look at the changes…
A tax for vacant residential property:
From 1 January 2018, a tax applies for vacant residential property. The vacant residential property tax is a 1% annual tax on the capital improved value (CIV) of the taxable property. The CIV can be found on your council rates notices.
Properties will be considered vacant if they are left unoccupied for six months or more in a calendar year. Note the six months do not need to be continuous. The vacant residential property tax (VRPT) only applies to vacant residential properties located in the following local council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse, and Yarra.
The vacant residential property tax does not apply to holiday homes, city units used for work purposes, properties in deceased estates and homes subject to genuine temporary absences such as for medical reasons or for those who are temporarily overseas.
The vacant residential property tax is self-reporting, this means owners of vacant residential property will be required to notify the State Revenue Office (SRO) when they meet the requirements of the vacant residential property tax. However the SRO will observe to ensure that vacant residential properties are being declared and it can also be monitored by utility usage.
Source: State Revenue Office Victoria website
Land Tax to be revalued annually:
From 2019, land tax will be revalued annually instead of biannually.
If you own property in Victoria, paying land tax depends on what land you own, what it is used for, and its total value. As it stands currently, you are liable for land tax if the taxable value of your land holdings exceeds $250,000. Your PPOR is exempt from your land holdings.
Land tax is currently assessed on your land holdings as at midnight on December 31 of the previous year. Previously, the value of your land holdings, which land tax is assessed on, was updated biannually (i.e. every two years) and is calculated on the CIV as per your rates notice.
As of 2019, Land Tax is revalued annually instead of biannually. In other words, a higher amount of land tax will most likely apply given the ongoing strength of the Melbourne property market.
Source: The Australian 29 April 2017
Current land tax: State Revenue Office Victoria website
(Reproduced courtesy of Mario Borg)