Vacant residential land tax

Vacant residential land tax (VRLT) may apply to residential land that is vacant for more than 6 months in the preceding calendar year. Residential land includes:

• land with a home on it
• land with a home which is being renovated or where a former home has been demolished and a new home is being constructed
• land with a home on it that has been uninhabitable for 2 years or more.

Residential land does not include land without a home on it (sometimes called unimproved land), commercial residential premises, residential care facilities, supported residential services or retirement villages.

The Victorian Government introduced VRLT from 1 January 2018 to help address the lack of housing supply in Victoria. VRLT is assessed by calendar year (1 January to 31 December) and the owner of the property is liable for it. VRLT is different to land tax, the absentee owner surcharge and the federal annual vacancy fee. 

From 1 January 2025, VRLT’s scope is changing. You can read about the changes announced in December 2023 or read our answers to frequently asked questions. 

It is important to understand that VRLT for any year is assessed on the previous year’s occupation of the property. For example, VRLT in 2024 is based on a property’s vacancy in 2023. 

You must notify us by 15 January if you own residential land and it is vacant for more than 6 months in the preceding calendar year. 

VRLT from 1 January 2025

Where does VRLT apply?

From 1 January 2025, VRLT will apply to residential land across all of Victoria if the land is vacant for more than 6 months in the preceding calendar year. Prior to 1 January 2025, it applied only to vacant residential land in inner and middle Melbourne. 

This means that if you own residential land in Victoria that is vacant for more than 6 months in 2024, you may be liable for VRLT in 2025. 

How much is VRLT?

From 1 January 2025, a progressive rate of VRLT will apply to non-exempt vacant residential land across all of Victoria. VRLT is calculated on the capital improved value (CIV) of taxable land. The CIV of a property is the value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process. It is displayed on the council rates notice for the property.

The rate of VRLT is based on the number of consecutive tax years the land has been liable for VRLT and is:

• 1% of the CIV of the land for the first year the land is liable for VRLT where the land was not liable for VRLT in the preceding tax year
• 2% of the CIV of the land where the land is liable for VRLT for a second consecutive year
• 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year.

VRLT 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 about unimproved land and VRLT is coming soon.

Non-exempt vacant residential land across all of Victoria remains subject to the progressive rates explained above.

VRLT from 1 January 2018 to 31 December 2024

Where does VRLT apply?

VRLT applies only to residential land in inner and middle Melbourne that was vacant for more than 6 months in the preceding calendar year.

Vacant homes in the following council areas may be affected:

• Banyule
• Bayside
• Boroondara
• Darebin
• Glen Eira
• Hobsons Bay
• Manningham
• Maribyrnong
• Melbourne
• Monash
• Moonee Valley
• Merri-bek (formerly Moreland)
• Port Phillip
• Stonnington
• Whitehorse
• Yarra

How much is VRLT?

This annual tax is set at 1% of the CIV of taxable land. For example, if a vacant home has a CIV of $500,000, VRLT will be $5,000.

Vacant residential land tax calculator

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 is not enough that the property is available for occupation, such as by listing on a short-term rental website. It must actually have been used and occupied for more than 6 months.

It is not enough for the property to 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.

Exemptions

Homes that are exempt from land tax are also exempt from vacant residential land tax. However, an exemption from VRLT does not mean that your property is exempt from land tax.

Exemptions from land tax

Exemptions from VRLT

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

• ownership of the property changed during that year
• the property became a residential property during that year
• the property became a residential property during the previous 2 calendar years and ownership is unchanged. From 1 January 2025, this exemption will be extended to allow a maximum exemption period of 3 years, provided the owner has made genuine and reasonable efforts to sell the land. If the property continues to be unoccupied and unsold after this time, the land will be liable for VRLT at the rate of 1% until it is sold
• the property was used as a holiday home and occupied by the owner for at least 4 weeks of that year and the owner has a PPR in Australia (homes owned by companies, associations or organisations are generally not eligible for this exemption). From 1 January 2025, a relative of the owner or relative of a vested beneficiary can satisfy the 4-week use and occupation requirement
• the property was occupied by the owner for at least 140 days of that year for the purpose of attending their workplace or business, and the owner has a PPR in Australia (homes owned by companies, associations or organisations are generally not eligible for this exemption).

From the 2020 land tax year, a vested beneficiary may benefit from the exemptions for holiday homes and properties used for attending a workplace or business. However, beneficiaries of other types of trusts are not eligible for these exemptions.

Use our online tool to determine if you are liable for VRLT in 2024 or earlier. You can read more about these exemptions, including eligibility criteria from 2025 onwards.

Do I have to pay vacant residential land tax?

Construction and renovation

Homes undergoing significant renovations or reconstruction will not be considered vacant for up to 2 years from the date a building permit for the construction or renovation was issued. The Commissioner of State Revenue can extend this period under certain circumstances.

You do not need to notify us about such property.

Notification requirements

If you own a property that was unoccupied for more than 6 months during a calendar year, you are required to notify us about the property by 15 January of the following year using our online portal.

Owners who miss the deadline are encouraged to notify us about vacant property as soon as possible through our portal. 

Failing to tell us that you own vacant residential property is a notification default under the Taxation Administration Act 1997. When this happens, you will be liable for penalty tax on the amount assessed in accordance with our revenue ruling on penalty tax and interest. This may be penalty tax of:

• 5% if you voluntarily tell us about your vacant residential properties before we start an investigation
• 20% if you tell us about your vacant residential properties after we start an investigation
• up to 90% if we believe that you intentionally disregarded the law and hindered our investigation.

In addition to our ruling on penalty tax and interest, the Commissioner has issued a ruling on notification defaults to explain the circumstances amounting to a VRLT notification default.

Late disclosures are treated more favourably than vacant properties identified through an investigation if the State Revenue Office is to consider remission of penalty tax.

Notify us via our online portal

The portal allows owners or their representatives to claim an exemption from VRLT, change their contact details, and nominate a representative to receive future correspondence about VRLT.

Existing State Revenue Office customers can enter their customer information to have their property details pre-populated into the portal, making the notification process quicker.

Tip-offs

Our priority is to help property owners pay the right amount of tax at the right time.

If you suspect that a property owner is not complying with their obligations, you are encouraged to contact us with a tip-off.

Frequently asked questions about VRLT 

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