Generally, the main residence exemption for land tax purposes only applies where a taxpayer has physically resided at the property from 1 July to 31 December of the previous land tax year. For example, in order for an individual to claim main residence exemption for the 2018 year, the individual would have needed to physically reside in the property between 1 July 2017 and 31 December 2017.

Where the individual is required to move out of their property while undertaking a renovation / rebuild such that they have physically resided in the property for at least 6 months of the previous land tax year, the land will not be eligible for the main residence exemption.

However, subject to certain restrictions, section 61 of the Land Tax Act of Victoria provides a mechanism to enable the individual to subsequently apply to the State Revenue Office of Victoria to receive a refund of the land tax assessments relating to the property as and when the renovation is complete and they move back into the property for 6 months.

Effectively, section 61 of the Land Tax Act allows an individual to apply for a refund of land tax for 2 previous years. However, section 61 gives further discretion to the Commissioner of the State Revenue Office to exercise discretion to refund a further 2 years prior.

For example, say an individual moves out of their property in March 2016, constructs a new house on their property and only moves back into it in February 2018 when the final Certificate of Occupancy on the new property was granted. The individual would initially be required to pay land tax for the 2017 year (1 January 2017 to 31 December 2017) but would potentially be eligible to apply to the State Revenue Office of Victoria for a refund of that tax after they have moved back into their property for at least 6 months.

In relation to the 2018 year assessment, the individual may initially be assessed for land tax on the property as they did not live in the property for the 1 July 2017 to 31 December 2017 period. However, section 55 of the Land Tax Act allows the taxpayer to initially defer payment of the land tax by notifying the State Revenue Office that they intend to reside in the property for more than 6 months of the 2018 year (in this case from February 2018). At the expiry of the 6 month period (say August 2018), the State Revenue Office of Victoria should subsequently amend the 2018 assessment by identifying that the property was the main residence of the individual for the 2018 year.

More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.au.

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