A vacancy refund refers to tax reliefs given to property owners should their rental properties be vacant, provided certain conditions are met.
Property owner who wish to obtain vacancy refunds must apply to the relevant authorities for it to be approved.
The purpose of vacancy refund is to give relief to property owners where:
- A building is fit for tenants to occupy but the landlord could not find tenants; or
- A building is unfit of occupation but undergoing works to make it fit
It could also be observed from court judgments that fitting-out periods of rental property when tenants renovate the premises can claim vacancy refunds.
While it might seem that this presents landlords with the opportunity to abuse the system by extending fitting-out period to obtain tax relief, the backloading of rents that increase annual value, which in turn increases property tax, would offset the potential for abuse.
Because of it getting less relevant in the modern real estate market, and partly because of abuse, this tax relief is no longer available to property investors.
