If you own multiple residential properties in Victoria and any of those are vacant or are expected to be vacant for more than 6 months you will be subject to vacant residential land tax. This also applies if you use the property for irregular personal use or work.

Vacant residential land tax applies to all vacant residential properties in Victoria unless you nominate for an exemption by the 15th of January 2025.

Please contact our office for further information or assistance.

See fact sheet below:

Vacant residential land tax (VRLT)

Applies to residential land vacant for more than 6 months in the preceding calendar year. VRLT has been expanded from the inner and middle Melbourne suburbs, to all properties in Victoria.

VRLT applies in addition to general land tax.

Definition of Residential Land:

Includes land with a home, under renovation, or uninhabitable for over 2 years.

Excludes: unimproved land (vacant block), commercial premises, residential care facilities, and retirement villages.

VRLT Rate – Calculated on the capital improved value (CIV) of the property:

CIV includes the value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process. CIV is displayed on the council rates notice.

VRLT for any year is assessed on the previous year’s occupation of the property. For example, VRLT in 2025 is based on a property’s vacancy in 2024.

Exemptions for Vacant Residential Land Tax (VRLT):

Homes that are unoccupied for more than 6 months of the preceding calendar year may be exempt from VRLT if:

• If the ownership of the property changed during the year.
• The property became residential during the year.
• The property became residential within the last 2 years & ownership is unchanged (extended to a maximum 3 years from 1 Jan 2025, provided the owner has made genuine and reasonable efforts to sell the land. VRLT will apply at 1% until it is sold). E.g. newly constructed property or a warehouse converted to residential housing.
• The property is used as a Holiday home occupied by the owner for at least 4 weeks continuous or aggregate (from 1 Jan 2025 includes relatives or certain beneficiaries of the home owner). Can only nominate one holiday home. SRO must be satisfied that the property was a genuine holiday home, having regard to its location and distance between the owner/beneficiary’s actual home and the holiday home, as well as the frequency and nature of its use.
• The property was occupied for at least 140 days by the owner or vested beneficiary for the purpose of attending work/business, and they have a principal place of residence (PPR) in Australia (homes owned by companies, associations or organisations are generally not eligible for this exemption).

What does ‘vacant’ mean:

A property is considered vacant if, for more than 6 months in the preceding calendar year, it has not been lived in by:

• the owner, or the owner’s permitted occupant, as their principal place of residence (PPR), or
• a person under a lease or short-term letting arrangement made in good faith.

The occupation does not need to be by the same occupant or for a single continuous period, and a beneficiary of a discretionary trust can be a permitted occupant.

It must actually be used and occupied for more than 6 months (not just available to occupy).

It can’t be used intermittently or on a casual basis by friends or family of the owner. The use and occupation must be either as a PPR or subject to a bona fide lease or letting arrangement.

Properties undergoing Construction and renovation:

Homes undergoing significant renovations or construction will not be considered vacant for up to 2 years from the date a building permit was issued. An extension can be requested under certain circumstances. There is no need to notify SRO for the first 2 years after the building permit was issued. Notification must be made in the third year.

Notification Requirements for Vacant Residential Land Tax (VRLT):

• Key Deadline: Notify the State Revenue Office (SRO) by 15 January if your property was vacant for over 6 months during the previous calendar year. Use the online portal to submit details.
• Missed Deadline: Late notifications should be submitted as soon as possible.
• Penalties for failing to notify:
  • 5% penalty tax for voluntary disclosure before an investigation.
  • 20% penalty tax if disclosed after an investigation starts.
  • Up to 90% penalty tax for intentional non-compliance or hindrance of an investigation.

From 1 January 2026:

Unimproved residential land in metropolitan Melbourne that has remained undeveloped for at least 5 years and is capable of residential development may attract VRLT from 1 January 2026 onwards. More information coming soon.

For further information please also see the below videos on the SRO website:
https://www.sro.vic.gov.au/videos/my-holiday-home-exempt-vacant-residential-land-tax
https://www.sro.vic.gov.au/videos/vacant-residential-land-tax-0