Changes to the Vacant Residential Land Tax: How it will affect owners of holiday homes

The changes to the vacant residential land tax (VRLT) laws flagged in our recent article have now passed into law, with the new bill receiving Royal Assent on 12 December 2023.

After updates made during Parliamentary debate, these changes now address one of the major concerns affecting people with holiday homes located in Victoria raised in our previous article, but still leaves major uncertainty for the owners of holiday homes which are owned in trusts or company structures.

Use by owner’s relatives now qualifies for exemption

The ‘holiday home’ exemption from VRLT will now apply where the owner or the owner’s relatives use and occupy the holiday home for four weeks each year (whether continuous or in aggregate). Previously, the exemption only applied to use by the owners themselves.

‘Relatives’ include the owner’s spouse/domestic partner, lineal ancestors and descendants, siblings, and includes the owner’s spouses siblings, as well as spouses of the owner’s children and siblings.

This is welcome news for families who share use of a holiday home held in personal names.

Holiday homes held in companies and trusts

While the changes made by Parliament go some way in providing a common-sense approach to the exemption in the context of the VRLT catchment area being expanded State-wide, what remains outstanding is the application of VRLT to holiday homes owned within a company or trust structure. 

This issue was considered in Parliament, but was not addressed in the final bill. Attorney-General Jaclyn Symes has stated that the government is “committed” to extending the exemption to holiday homes owned this way, but indicated that due to a “complexity” in incorporating such changes, this issue will be reconsidered in the first half of 2024. 

Therefore at this stage, there is no legislated exemption from VRLT for holiday homes owned in trusts or company structures, and unless the Government follows through on the comments above, holiday homes held under such structures will be liable for VRLT from 2025.

Because there is no guarantee that changes will be made in this regard, owners of such properties would be wise to consider whether they wish to lease those properties out for at least 6 months of the 2024 year so as to ensure they won’t receive a VRLT assessment for 2025.

How we can help

The team at Moores is across the complex issues raised by the VRLT changes, and would be glad to help you or your clients to navigate the new rules.

We can assist with:

  • Advising on the impact of the changes on a specific person’s landholdings
  • Exploring options to ensure that a property is not vacant and caught by the VRLT regime
  • Exploring potential restructuring options, including tax and estate planning and administration implications

Contact us

Please contact us for more detailed and tailored help

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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.