As part of a suite of changes to make housing more affordable, the Victorian Government will introduce a new tax levied at 1 per cent on vacant residential property to target empty properties in Melbourne’s inner and middle suburbs.
Owners will be encouraged to make vacant properties eligible for purchase or rent.
There will be exemptions if it is a holiday house, a deceased estate or if the owner is overseas.
“This will send a really strong message to people that if you are effectively banking an empty property and denying that to the market and contributing to the lack of supply, then there’s something you can do about it,”
“You can simply pay the tax or you might go see a real estate agent.”
Premier Daniel Andrews said.
- Is a tax really going to help home affordability and supply?
- 1% on a property valued at $850,000 will be $8,500 per year.
Renting this property could give you approx. $30 – $35,000 per annum in income. If this pushes you into the higher tax bracket and there is no loan on the property this income effectively reduces per year. (taxed at 49%)
Your taxable income may increase on your salary also, again reducing your net income.
$30,000 – $35,000 extra sounds attractive but this could reduce dramatically considering taxes, not to mention the older generation, how this extra income will affect and maybe reduce their pension.
So is it more cost effective to pay the tax?
Or assist the housing demand and place your property for rent?
To avoid getting the wrong tenant be sure to use a reputable agency to not only find you a tenant but also manage it for you.