Vacant Property: How to Avoid Local Taxes or Obtain a Tax Relief
Owning a vacant property can lead to unexpected costs, particularly in the form of local taxes. When a property remains unoccupied for an extended period, taxes such as property tax or housing tax may apply. However, there are conditions under which you can avoid or reduce these tax obligations. Here’s a comprehensive guide to help you understand how to navigate the tax implications of owning a vacant property and when you might qualify for exemptions.
What Qualifies as a Vacant Property?
It is one that has been left unoccupied for at least one year. If the property is not furnished or equipped for habitation, you are not liable for housing tax. However, if tit is located in a high-demand area (also known as a “zone tendue”) and has been unoccupied since at least January 1, 2024, you may be subject to the Vacant Housing Tax (TLV).
Exemptions for the Vacant Property Tax (TLV)
You can avoid paying the vacant property tax under certain circumstances:
- If the property was occupied for at least 90 consecutive days by you or a tenant within the year.
- If it is deemed uninhabitable and requires repairs that amount to more than 25% of its rental value.
- If the vacancy was involuntary, meaning you made genuine efforts to rent or sell the property but were unable to find a tenant or buyer.
If you receive a notice for the TLV in November, you can file an appeal with your local tax office, providing proof of the property’s occupation, its uninhabitable condition, or your attempts to rent or sell it.
Local Taxes on Vacant Properties Outside High-Demand Areas
Even outside of high-demand areas, municipalities can impose a Housing Tax on Vacant Properties (THLV) if a property has been empty for more than two years as of January 1. The same exemptions available for the TLV apply to this tax. You can provide documentation to prove that the vacant property has either been occupied or that its prolonged vacancy was beyond your control.
Avoiding Vacant Property Tax
If you own a vacant property, knowing the rules around local taxes is essential. Understanding the conditions that exempt your property from these taxes can help reduce your financial burden. By maintaining documentation of your efforts to occupy or sell the property, or demonstrating that it is uninhabitable, you can file for tax relief and avoid unnecessary costs associated with owning it.
This article offers crucial insights for those who own it and wish to minimize or eliminate their local tax liabilities. Understanding the criteria for tax exemption can make a significant difference in managing the costs of an unoccupied home.
