If you have a principal place of residence (PPR) over two (or more) titles, you may be currently entitled to a land tax exemption for all titles – provided the additional titles:
- adjoin the PPR land or are separated by only a road, railway or something that you can reasonably move around or across;
- do not contain a separate residence;
- enhance the value of the residence; and
- are used solely for the private benefit and enjoyment of the person who occupies the residence.
Examples of additional titles that may qualify for this exemption may include contiguous land containing a pool, tennis court or garden.
However, from 1 January 2020, the exemption from land tax for land contiguous to that of a PPR in metropolitan Melbourne will be removed. This means you may be paying land tax on the additional titles.
When will the land tax exemption continue to apply?
The land tax exemption will continue to remain for:
- land that is contiguous to your PPR if both are located in regional Victoria; or
- where an apartment or unit in metropolitan Melbourne that is a PPR has a separately titled car park and/or storage space.
Regional Victoria means the regional councils specifically listed by the SRO and the six alpine resorts of Mt Baw Baw, Mt Buller, Mt Hotham, Mt Stirling, Falls Creek and Lake Mountain.
How these changes may affect you
The changes are intended to promote the efficient use of land and discourage land-banking in residential areas.
The Government has indicated that you can keep your land tax exemption by consolidating your titles into one title by 31 December 2019.
However, for home-owners this is an additional expense and may not be straightforward in cases where the titles are held by the bank. The impact of consolidating titles with respect to a future sale of your property may also be an important consideration.
According to the State Revenue Office of Victoria, the Registrar of Titles must register the plan of consolidation by 31 December 2019 to ensure the consolidated title is eligible for the PPR exemption for the 2020 tax year. If you do not consolidate the titles, your PPR will still be exempt from land tax but land tax may apply on the contiguous land.
If you have a PPR over two (or more) titles and believe the above changes may apply to your circumstances we suggest you contact your property lawyer or conveyancer as soon as possible to discuss the possibility and or merit of consolidating your property titles. This process may take some time so prompt attention to this issue is recommended given the 31 December 2019 timeframe. If you require assistance liaising with a property lawyer or wish to discuss any other taxation issues involving your PPR please contact your Blaze Acumen advisor.