Investors Warned Over Vacant Residential Property: Sell, Rent or be Taxed

Vacant property owners in inner-Melbourne are being faced with the proposition to rent or sell their properties or receive a tax hike. 

The levy is predicted to rake in more than $80 million over four years, with owners paying one per cent of the property's capital improved value if they do not live in the house for more than six months a year.

The merit of a similar tax is also being debated in Queensland during the current state election campaign.

Census figures from 2016 showed that Australia had 200,000 more homes sitting empty than it did a decade ago.

The new tax is expected to hit hardest in the Melbourne City Council area, where more than 2500 houses and apartments are vacant. The Andrews Labor Government has warned property investors that they should sell or rent their property or be penalised with the new tax.

The Vacant Residential Property Tax (VRPT) will come into effect in Melbourne from 1 January, 2018 will aim to boost supply and meet growing demand for housing.

The tax will apply to dwellings that are vacant for more than six months in a calendar year including short term rentals such as Airbnb.

It will only apply within Melbourne’s 16 inner city councils, including Yarra, Melbourne, Darebin and Bayside municipalities, where up to 20,000 properties are believed to lie empty. Some exemptions apply including for holiday homes, city units for work purposes and properties in deceased estates.

The VRPT was introduced as part of the Homes for Victorians package announced earlier in the year, which also included abolishing stamp duty for first homebuyers on properties valued under $600,000.

[Related reading: First Home Stamp Duty Package a Major Step Forward for Victoria]"In a time when so many Victorians are trying to get into affordable housing, these homes shouldn’t be sitting idle and unused," Premier Andrews said.

[Related reading: What Should We Make Of The Vision South Bank Report?]The Greens estimate there are over 20,000 vacant apartments and houses in Brisbane.