As a foreign owner of a residential property in Australia, it’s important to be aware of the vacancy fee that may apply to your property. The vacancy fee is an annual fee that is applied to properties that are not occupied or available for rent for at least 183 days (6 months) in a 12-month period.
This fee was introduced in December 2017 as part of the Australian Government’s comprehensive housing affordability plan. The aim of this fee is to act as a financial incentive for foreign owners to make their properties available for rent, thereby increasing the available housing in Australia.
It’s important to note that the vacancy fee is 1% of the taxable value of the property, and is due annually on the anniversary of the day the property was acquired. It’s also important to be aware that there are exemptions and concessions available for certain properties, such as those that are occupied or available for rent for at least 183 days in a 12-month period, properties that are under development, or properties that are used for specific purposes such as affordable housing or student accommodation.
If you’re a foreign owner of a residential property in Australia, it’s important to check whether you may be liable for the vacancy fee and ensure that you comply with your obligations to pay the fee. Failure to pay the vacancy fee may result in fines and penalties, and in certain cases, the property may be sold to recover any unpaid fees.
For more information about the vacancy fee for foreign owners of residential property in Australia, you may consult with us for more details and how to comply with the law.
In conclusion, the vacancy fee is an annual fee that is applied to properties that are not occupied or available for rent for at least 183 days in a 12-month period. The aim of this fee is to act as a financial incentive for foreign owners to make their properties available for rent, thereby increasing the available housing in Australia. As a foreign owner, it’s important to be aware of the vacancy fee and to check whether you may be liable for the fee.
Who needs to lodge a vacancy fee return?
As a foreign owner of a residential property in Australia, it’s important to be aware of the vacancy fee return that may apply to your property. The vacancy fee return is a form that must be lodged by foreign owners of residential dwellings who:
- Made a foreign investment application for residential property after 7:30 pm AEST on 9 May 2017
- Purchased under a New Dwelling Exemption Certificate that a developer applied for after 7:30 pm AEST on 9 May 2017.
It’s also important to note that the vacancy fee may also apply where a foreign person failed to submit a foreign investment application but purchased a residential property before 9 May 2017.
It’s worth mentioning that foreign owners of vacant land do not have to lodge a vacancy fee return until a dwelling has been constructed on the land. In the case of multiple dwellings being constructed on the land, a vacancy fee return must be lodged for each new dwelling constructed.
It’s important to note that you must lodge a return even when the dwelling has been occupied or made available for rent.
If the dwelling is owned by 2 or more people as joint tenants, you only need to lodge one return. However, if you own a share of a dwelling as a tenant in common, you each must lodge a vacancy fee return. If you are not sure whether you are a joint tenant or a tenant in common, please refer to the definitions on the Foreign Investment Review Board (FIRB) site.
In some cases, a vacancy fee return will not be required to be lodged, for example:
- The dwelling is sold or otherwise legally transferred (including in the event of the death of the owner)
- You are no longer a foreign person.
In conclusion, the vacancy fee return is a form that must be lodged by foreign owners of residential property in Australia, who have made a foreign investment application after 9 May 2017, or purchased under a New Dwelling Exemption Certificate that a developer applied for after 7:30 pm AEST on 9 May 2017. Foreign owners of vacant land do not have to lodge a vacancy fee return until a dwelling has been constructed on the land. If the dwelling is owned by 2 or more people as joint tenants, you only need to lodge one return. However, if you own a share of a dwelling as a tenant in common, you each must lodge a vacancy fee return. For more details, you may consult our office for a Vacancy Fee form and payment instructions.
When is a dwelling residentially occupied?
When it comes to determining whether a dwelling is considered residentially occupied, there are a few key factors to consider. A dwelling is considered residentially occupied if, for at least 183 days in a vacancy year, any of the following circumstances are met:
- The owner or a relative of the owner genuinely occupied the dwelling as a residence.
- The dwelling was genuinely occupied as a residence subject to lease or license for a minimum term of 30 days.
- The dwelling was made genuinely available as a residence on the rental market with minimum terms of 30 days.
It’s important to note that residential occupancy of at least 183 days does not need to be one continuous block of time. Residential occupancy can be made up of multiple continuous periods of at least 30 days throughout the vacancy year.
However, it’s worth noting that dwellings made available for short-term leases of fewer than 30 days (including via web-based stay sites) are not considered residentially occupied and would be liable for a vacancy fee.
To be considered genuinely available for occupation as a residence, the dwelling must be:
- Made available on the rental market.
- Advertised publicly.
- Available at a market rent.
It’s important to mention that if COVID-19 (coronavirus) has affected how your property was residentially occupied and you need help completing your vacancy fee return, you may consult our office.
To prove a dwelling was residentially occupied during a vacancy year, you may be required to provide supporting evidence, such as lease agreements, rental receipts, and other documentation.
In conclusion, a dwelling is considered residentially occupied if, for at least 183 days in a vacancy year, any of the following circumstances are met: the owner or a relative of the owner genuinely occupied the dwelling as a residence, the dwelling was genuinely occupied as a residence subject to lease or license for minimum terms of 30 days, the dwelling was made genuinely available as a residence on the rental market (with minimum terms of 30 days). However, dwellings made available for short-term lease of fewer than 30 days (including via web-based stay sites) are not considered residentially occupied and would be liable for a vacancy fee. To prove a dwelling was residentially occupied during a vacancy year, you may be required to provide supporting evidence.
