Whilst much of the focus of the Victorian Government’s 2017 budget was on improvements to transport and infrastructure, and investments in health care and education – a win for all Victorians, local property owners and investors need to be aware of some impending tax changes.
The Victorian Government has announced it intends to introduce a vacant residential property tax, applicable from January 1 2018, to be levied on all homes that are vacant for more than six months in a calendar year. This new tax will be equivalent to one per cent of the property’s capital improved value and is due to be self-reporting, although potentially checked through utility usage. There will be specific exemptions, including for holiday homes (owned by those with a principal place of residence in Australia), a city unit for work purposes, deceased estates and homes subject to legitimate temporary absences (eg medical care, renovations, overseas appointments). This tax is designed to encourage investors to either rent or sell their properties, as tight vacancy rates suggest many properties are being kept empty, despite a record building boom in Victoria.
Land tax will be calculated annually rather than bi-annually from 2019, leading to more frequent but smaller taxation increases. This will also lead to a higher rate payable for the Fire Services Levy, collected within council rates and based on property value.
Also from July 1 this year, investment property transfers between partners will no longer be exempt from stamp duty. Transfers for a principal place of residence will remain exempt, as will the transfer of properties after a relationship breakdown.
More tax changes are possible within the Federal Government’s budget due next week, with housing affordability expected to be addressed in some form. Lucas will naturally keep you abreast of any changes that could affect property owners, investors and buyers.
To find out the current rental and sales market potential of your home or investment property, or for a report detailing the recent property results in your building or suburb, please contact our award-winning team on 9091 1400.