Windfall Gains Tax and Land Tax Adjustments Now Prohibited
Prior to these amendments, a Vendor could recover windfall gains tax and adjust land tax pursuant to a Contract of Sale, meaning a Purchaser could be liable to pay all of the Vendor's windfall gains tax. However, for Contracts of Sale entered into after 1 January 2024, Vendors will no longer be permitted to pass these liabilities onto Purchasers (except where the transaction is $10 million or over). It will be illegal.
The maximum penalty for purporting to pass on these liabilities is 60 penalty units ($11,538.60) for an individual and 300 penalty units ($57,693.00) for a body corporate.
Vacant Residential Land Tax
From 1 January 2025, Vacant Residential Land Tax will apply to residential land across Victoria that has been vacant for more than 6 months in the last calendar year. A progressive rate applies:
- 1% of capital improved value for the first year
- 2% for the second consecutive year
- 3% for the third consecutive year
Exemptions apply for new residential premises for 3 years where the owner has made genuine efforts to sell, and for holiday homes used for at least 4 weeks in the preceding year by a relative of the owner.
What Does This Mean for You?
Vendors and owners of residential properties should engage experienced conveyancers and lawyers before selling or purchasing a property to ensure they receive up-to-date advice on their rights and obligations and do not incur penalties for failing to comply.