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Land Tax exemptions for Rooming Houses

Land Tax Rules for Rooming Houses in Melbourne, Victoria
Land tax in Victoria is a state tax on land ownership, administered by the State Revenue Office (SRO). However, certain rooming houses (also known as boarding houses) may qualify for land tax exemptions if they meet strict criteria. Below is an overview of how land tax applies to rooming houses in Melbourne (and across Victoria), covering eligibility for exemptions, tax rates, owner compliance, government relief measures, and how to apply for an exemption.
Eligibility Criteria for Exemptions
To qualify for a land tax exemption as a rooming house, the property must meet all conditions set by Victorian law and the SRO. Key eligibility criteria include:
  • Registered Rooming House: The property must operate as a rooming house as defined in the Residential Tenancies Act 1997 – generally meaning a building where one or more rooms are available for rent and four or more unrelated residents may occupy the property. It must be registered with the local council under Part 6 of the Public Health and Wellbeing Act 2008​. Proof of current registration is required each year for the exemption.
  • Primary Use for Low-Income Accommodation: The property must be used primarily to provide low-cost accommodation to people on low incomes​. In practice, this means the rooming house should serve as affordable housing for vulnerable or low-income tenants, not as short-term or tourist accommodation.
  • Occupancy and Room Requirements: The rooming house should contain one or more rooms (excluding any self-contained units) that are available to accommodate at least four residents at any given time​. . Additionally, at least one rooming house resident must be occupying the premises when you claim the exemption​. Residents must have rights to occupy a room and use shared facilities (consistent with rooming house tenancy arrangements)​
  • Arm’s-Length Residents: The residents should generally be unrelated to the property owner or operator. The SRO’s guidelines specify that no rooming house resident can be a relative of the landowner or the manager/lessee, and residents should not be owners, directors, shareholders (or their relatives) of any entity that owns or leases the property​. This ensures the exemption is used for genuine public accommodation, not for housing family or business associates.
  • Long-Term Occupancy: To maintain eligibility, a significant portion of the residents should be long-term. The SRO’s checklist requires that at least 80% of the rooming house was occupied by long-term residents (those staying 3+ months) in the previous tax year​. This criterion ensures the property is providing stable housing rather than very short-term stays.
  • Rent is Below the Maximum Tariff: The weekly rent (tariff) charged per person must not exceed the maximum permitted tariff set by the SRO for rooming houses. This cap is updated annually and is pegged to a percentage of the Commonwealth aged pension. For example, for the 2025 land tax year the maximum weekly tariff per person was $400.54 for lodging only (single room) or $301.91 per person for shared lodging, with higher caps if full board (meals) is included​ .These figures equate to 70% of the aged pension for lodging-only, or 105% for full board​. Charging above these limits would disqualify the property from the exemption as it would no longer be “low-cost” accommodation.
If all the above criteria are met, the land is considered eligible for the rooming house land tax exemption. (If most are met but one is missed due to exceptional circumstances beyond your control – for example, a late start in the year or temporary renovations affecting occupancy – the SRO may still consider an exemption on a case-by-case basis if you contact them and explain​. (If any criterion is not met and no exemption applies), the property will be subject to land tax as normal and the owner must notify the SRO accordingly (usually by 31 January of the year)​..
Compliance Requirements for Property Owners
Property owners who operate rooming houses must comply with various requirements to maintain their land tax exemption and abide by the law. By staying on top of these requirements – registration, affordable rents, record-keeping, and prompt communication – owners can remain in compliance and continue to benefit from the land tax exemption while providing an important service to the community.
  • Council Registration and Standards: The rooming house must remain registered with the local council each year under the Public Health and Wellbeing Act 2008. Registration involves meeting health, safety, and amenity standards (such as providing adequate bathrooms, fire safety measures, and minimum room conditions as enforced by Consumer Affairs Victoria). Failing to renew the registration or meet these standards means the property is no longer a legal rooming house, which would also nullify the land tax exemption.
  • Operate as a Bona Fide Rooming House: Owners should ensure the property continues to operate genuinely as a rooming house for low-income residents. This means keeping the occupancy at required levels (preferably long-term tenants occupying most rooms), and not using the property for other purposes (e.g., not converting it to short-stay accommodation). The SRO may require a description and floor plan of the premises to confirm how it’s being used and that the majority of the property is devoted to the rooming house use​.
  • Maintain Affordable Rents: Compliance includes keeping the weekly tariffs charged to residents at or below the maximum permitted tariffs set by the SRO (which are updated annually). Charging rent above those caps would violate the low-cost accommodation requirement and could lead to land tax applying. Owners should monitor the SRO’s published tariff thresholds each year (tied to 70%/105% of the aged pension)​. To ensure their rents stay within the limit.
  • Record-Keeping: Rooming house operators must keep proper records of their operations. The SRO specifically asks for an occupancy register or similar records detailing each resident’s length of stay and the rent (tariff) paid​. Owners should also have residents sign residency agreements or abide by documented house rules​ (Victoria has a model rooming house residency agreement available via Consumer Affairs Victoria​). These documents not only help in managing the property but will serve as evidence if claiming the exemption.
  • Evidence of Low-Income Residents: Since the exemption is meant to benefit housing for people on low incomes, owners should be prepared to prove the income status of their residents. This could include obtaining letters or referrals from housing support agencies, welfare organizations, or government departments indicating that the residents are low-income or receiving income support​. The SRO may request such evidence to ensure the spirit of the exemption is met (for example, the application asks for “documentary evidence, such as letters from housing or welfare agencies, to show that residents at the property are on low incomes”​
  • Notification of Changes: If the property’s status changes and it no longer meets the exemption criteria, the owner is responsible for informing the SRO. For instance, if you stop operating the rooming house, reduce the number of residents below four, or begin charging higher rents, you must notify the SRO (generally by 31 January of the following year) that the land will become taxable​. Failing to notify and incorrectly claiming an exemption can lead to penalties or back-taxes. Essentially, owners must proactively comply by either continuing to meet all conditions or by paying land tax when they cease to qualify.
  • General Land Tax Obligations: Like all landowners, rooming house owners should ensure they are correctly registered in the SRO system (via the online portal) and pay any land tax assessed by the due date if the exemption does not apply. Land tax is usually assessed in the first quarter of each calendar year. If an owner has other taxable properties, they must pay tax on those; the rooming house exemption only covers the land used for the qualifying rooming house. Compliance also means lodging any required returns or providing information the SRO requests about the property. In the event of an audit, owners should be able to produce the records and documents mentioned above to substantiate their exemption.
Application Process for Exemptions
Applying for a rooming house land tax exemption in Victoria involves submitting an application to the State Revenue Office with supporting documentation. The process is as follows: Ensure Eligibility: Before applying, confirm that your property meets all the eligibility criteria for the exemption (outlined above). You should have your rooming house registered with the council and be complying with the low-cost accommodation requirements. It’s wise to review the SRO’s Rooming House Exemption Checklist to self-assess eligibility​ Gather Required Documentation: The SRO will ask for detailed information and evidence about your rooming house. Be prepared to gather and provide the following documents and details​
  • Property and Usage Details: Specify the address of the property and the tax year(s) for which you seek the exemption. Provide a description of the premises, including the number of rooms and any parts of the property not used as part of the rooming house (for example, if a section is a separate apartment or owner’s residence)
  • Resident and Rent Details: Indicate the typical number of residents and the demographic (types of people) you accommodate (e.g. students, pensioners, people on welfare). State the maximum weekly tariffs (rent) charged per person and whether that includes full board or just lodging​. This will be checked against the SRO’s permitted tariff thresholds.
  • Registration Proof: Include a copy of the certificate of registration as a rooming house under the Public Health and Wellbeing Act for each year you want the exemption​. Usually, local councils issue an annual registration certificate.
  • Occupancy Records: Provide an occupancy register or records showing the dates of residence and rent paid by each occupant during the period for which the exemption is claimed​. This demonstrates long-term occupancy and affordable rent levels.
  • Tenancy Agreements/House Rules: Attach a copy of your rooming house residency agreement or house rules that residents are required to follow​. This helps show that proper rooming house arrangements are in place consistent with legal requirements.Operating Details: Explain the circumstances of how accommodation is offered. For instance, note if you work with any housing agencies or advertise to vulnerable groups, and whether tenants are referred via social services. If you have any brochures, flyers, or online advertisements for the rooming house, include copies of these​ to evidence that you publicly offer the rooms for rent.
  • Evidence of Low Incomes: Include documentary evidence of tenants’ low-income status. The SRO suggests letters from housing or welfare agencies as an example​. You could also provide Centrelink income statements or other proof (while respecting privacy) that show residents are on pensions, benefits, or low wages.
  • Property Plan: If part of the property is used for non-rooming house purposes, provide a floor plan or diagram marking which areas are devoted to the rooming house and which are not​. This is important if, say, the building has a section used as a separate dwelling or business – only the portion used as a rooming house can be exempt.
How to submit
  • Ensure Eligibility: Before applying, confirm that your property meets all the eligibility criteria for the exemption (outlined above). You should have your rooming house registered with the council and be complying with the low-cost accommodation requirements. It’s wise to review the SRO’s Rooming House Exemption Checklist to self-assess eligibility. ​
  • Gather Required Documentation: The SRO will ask for detailed information and evidence about your rooming house. Be prepared to gather and provide the following documents and details​
  • Submit via My Land Tax: The SRO requires applications to be lodged through the My Land Tax online portal​. You’ll need to log in (or create an account) and select the option to apply for an exemption. There you can enter the details and upload the documents gathered. Ensure you complete all sections of the application form and double-check that your attachments are clear and complete.
  • Timing: It’s advisable to apply early in the tax year for which you want the exemption. Land tax assessments for the year are typically issued by the SRO in the first few months (e.g., around March). If your rooming house was already exempt in the prior year and nothing has changed, the SRO might carry forward the exemption, but you should follow any instructions they provide (such as the checklist’s guidance to notify by 31 January if you no longer qualify​). If this is a new exemption claim, apply as soon as you can, ideally before the assessment is issued or by 31 January. Late applications might still be considered, but delaying could mean you receive a land tax bill that then needs to be adjusted.
  • SRO Review and Outcome: Once submitted, the SRO will review your application. They may contact you if additional information is needed. If approved, your land will be marked as exempt for the relevant year(s) and you won’t be charged land tax on it. (If you had already received an assessment, the SRO would issue a revised assessment or refund to apply the exemption retroactively.) If the SRO is not satisfied that all criteria are met, they may deny or delay the exemption. In that case, you would remain liable for land tax – you could seek a reassessment if circumstances change or provide further evidence to support your claim. There is also an objection/appeal process if you believe a denial is incorrect, but it’s best to ensure your initial application is comprehensive to avoid that.
  • Annual Confirmation: In subsequent years, you typically do not need to reapply from scratch each year as long as the property continues to operate under the same conditions. The SRO may ask for updated evidence (like the new year’s registration certificate or confirmation of tariffs). Pay attention to any correspondence or annual checklist from the SRO to confirm ongoing eligibility. As noted, if you cease to meet the requirements, you must inform the SRO. Conversely, if you continue to meet them, the exemption can continue each year.
Throughout this process, it’s important to rely on official guidance. The SRO’s website has a dedicated page for rooming house land tax exemptions​ and an exemption checklist. Always refer to these resources or contact the SRO directly if you are unsure about the requirements. By following the proper application steps and providing thorough documentation, eligible rooming house owners in Melbourne (and across Victoria) can benefit from significant land tax savings while complying with all legal obligations. The information provided regarding land tax rules for rooming houses in Melbourne, Victoria is for general guidance only and is not legal or financial advice. While every effort has been made to ensure accuracy, regulations and policies can change, and individual circumstances may affect eligibility and compliance.
We strongly recommend consulting a qualified legal, financial, or tax professional or referring to the official State Revenue Office (SRO) Victoria website at www.sro.vic.gov.au for the most current and personalized advice. Turnkey Home and its representatives do not accept liability for any decisions made based on this information.
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