If you own a property in Melbourne but don’t occupy or rent it, you’ll be hit with a new ‘land banking’ tax from January 18

Property owners with vacant homes in Melbourne will  have just months to sell or rent their property  to avoid being slapped with a new tax.The levy, predicted to rake in more than $80 million over four years, will come into effect from January 1.

Also owners has to pay 1 per cent of the property’s capital improved value if they do not live in the house for more than six months a year.

The tax slug will only apply in 16 inner-city areas. This includes in Yarra, Melbourne, Darebin and Bayside municipalities.

Data shows  more than a 1700 properties are vacant in the Moonee Valley, while more than 2500 remain empty in city of Melbourne.

Premier Daniel Andrews told property owners currently “land banking” to call a real estate agent.

“This is a common sense change,” he said.

“If your property is lying dormant, empty, if it’s not available, we need it to be.”

Holiday homes and second residences that are used will be exempt.

But it will include short-term rental, including Airbnb properties, that will need to be occupied for more than half the year.

Treasurer Tim Pallas announced the new levy as a key Budget promise last year.

It came under fire from Upper House MPs in May who said it would be “tricky” to police.

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It will rely heavily on the owners reporting that their properties remain vacant.

“The state revenue office are a very efficient group of people,” Mr Andrews said.

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“While in the first instance this will be a self-reporting tax, there are opportunities through utilities data and other data for us to check on compliance.

“If you fail to report, there are some very significant penalties.”– he added.

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