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May 25, 2024

Vacant Residential Land Tax — Changes to ‘Holiday Home’ Exemption

In December 2023, substantial changes were made to property taxes in Victoria including Vacant Residential Land Tax (VRLT). From 1 January 2025, owners of residential property in Victoria that are vacant for more than six months in the previous calendar year are liable for the VRLT unless an exemption applies. ‘Holiday homes’ that comply with certain criteria are one of the key exemptions.

The Victorian Government has introduced the State Tax Amendment Bill 2024 which, amongst other taxation changes, will (if passed) broaden the holiday home exemption to allow shareholders of companies, as well as certain beneficiaries of trusts and relatives of those shareholders and beneficiaries, to satisfy the exemption for a property owned by a company or trust. 

There is expected to be qualifying conditions under the new provisions in order to take advantage of the exemption, most notably that the land has been owned by the company or trust as of 28 November 2023 or if acquired after that date a purchase contract was entered into on or before this date and that the land has been owned continuously since this qualifying date.

Additionally the proposed changes will include restrictions on transfers between relatives or beneficiaries.  There must also be land being used as a designated “principal place of residence” by a shareholder, relative or beneficiary in the preceding year. 

The occupation requirement to obtain the exemption, being at least four weeks (either continuous or in aggregate) in the preceding years is not expected to be changed.

The proposed changes are expected to pass into law in May 2024 and we are closely monitoring the proposed changes and we will provide further updates on the matter.

For more information or to schedule a consultation, visit our website or call us on 03 5976 6500.

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