If you own a home or are planning to buy property but might not occupy it for a certain amount of time over the course of a year, you might become liable to pay an annual vacancy fee, which can impact on your property investment return. If you want to find out more about the annual vacancy fee, and what you can do to avoid it, be sure to read on:
What is it exactly?
The annual vacancy fee has been put into place so that the state can encourage property owners who are foreign residents of the country to make their property available for rent when they will not be occupying it for a certain amount of time. If you have made a successful foreign investment application for residential property or have a New Dwelling Exemption Certificate issued after 9 May 2017, you may be liable for the fee.
For example, John and Jessy want to live closer to some of their Australian relatives on the Gold Coast. They submit a foreign investment application, which is successful. The property is purchased in June 2017, during which time the couple stay in their new home for three months, before they leave the country again.
When they return in February 2018, they have 30 days to lodge a vacancy fee return to the ATO, which indicates how long the property was occupied during the year. Seeing as the couple’s home was not occupied for at least 6 months in the vacancy year, they are advised by the ATO to pay the fee.
What can you do?
The ATO normally sees the first day the foreign investor purchases their property as the first day of their vacancy year, which means that during this period, you have to ensure that the property is either occupied or made available for rent for at least 6 months within the given time period.
However, there are exemptions to the above:
- Legal ownership of the property changed
- The property is under repair due to natural disaster, fire or malicious damage
- The property is being renovated, and is unsafe to occupy
- Your legal tenant received long-term medical or other related care
- Certain legal restrictions
- The legal owner of the property is deceased, and the property is currently under administration
For all of the above, you will have to provide the correct documentation to avoid the fee. If you need any information regarding the annual vacancy fee, don’t hesitate to contact us!
Related Tag: Sydney Property Investment