The Government has passed its vacancy tax legislation and is set to charge foreign owners thousands of dollars a year if they leave their property vacant.
Announcing the new tax in the 2017 Federal Budget, the measure is aimed at encouraging investors to lease out their properties, thereby increasing the supply of rental properties on the market.
For properties worth up to $1 million, the owners will be charged an annual fee of $5,500 if their home is unoccupied and not available for rent at least six months of every year (short term leasing such as Airbnb doesn’t qualify). The vacancy penalty will increase the more expensive the home is.
Foreign owners will be required to keep records to prove their home has been occupied and submit a vacancy fee return to the Tax Commissioner each year.
If a property owner - or a relative of the owner – lives in the home for at least six months of the year, they can avoid paying the annual fee.
The new legislation also brings about change for domestic property investors who can no longer claim travelling expenses as tax deductions (to inspect their investment). There is also a new limit set on depreciation deductions to new assets for investment properties, such as air conditioners or dishwashers.