Victorian Land Tax - Getting your residence election right

By Ben Seeger
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Now who thought you could claim a land tax exemption for your principle place of residence (PPR) that you are now renting out while you don’t own/nominate another property as your PPR?

The short answer is… well, there is no short answer.

Confusion comes due to tax payers applying similar rules as the capital gains tax (CGT) exemption available to your PPR when you rent your property out.  Unfortunately we have two very different sets of laws applicable to the Victorian State Revenue Office (SRO) and the Australian Taxation Office.

In general, your PPR is except from land tax provided it is used and occupied as your PPR in accordance with the Land Tax Act. There is provisions within the Act that provide for land to be treated as a person’s PPR despite the person’s temporary absence. 

The exemption does not apply where the absence continues for a period of more then six years or where the owner rents the PPR for a period of six consecutive months or more in a particular year.

What this means for tax payers now renting there PPR for a period greater then 6 months per financial year, is they are required to notify the SRO of a change in there PPR election. Keep in mind that the SRO can go back up to five years and raise an assessment for outstanding duties and penalties if you do not notify them within the prescribed time frames.

The best advice we can offer is to discuss with your trusted advisor what strategies may be employed, early in your holding period for PPR as there may be an opportunity to plan for changes before its too late.

Give us a call on 03 9810 3666 to meet with a HTA business advisor.

Topics: Insider

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