Vacant residential land tax — frequently asked questions

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

How much is the tax and how is it calculated?

For 2018–24, VRLT is an annual tax of 1% of the capital improved value (CIV) of taxable land. For example, if the taxable land has a CIV of $500,000, the tax is $5,000. 

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.

From 1 January 2025, a progressive rate of VRLT will apply to non-exempt land with a vacant residential property across all of Victoria. 

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.

Vacant residential land tax calculator

Is there a taxable value threshold?

No. Unlike land tax, there is no taxable value threshold for VRLT. This means land with a vacant residential property may be liable for VRLT regardless of its CIV. 

Where can I get more information? 

We are using our website, which is continually being updated, to make sure land owners are aware of their obligations and requirements for exemptions. You can join our subscriber list to receive notifications about VRLT.

Definitions

What is meant by 'vacant'?

A residential property is considered vacant unless it was occupied for more than 6 months in the preceding calendar year by:

• the owner, or the owner’s permitted occupant, as their principal place of residence, or
• a person under a lease or short-term letting arrangement.

The 6 months does not need to be continuous.

A permitted occupant is a person who uses and occupies the property with the permission of the owner. For example, a family member, friend or employee. 

A principal place of residence is the home you occupy and where you primarily reside. 

For the 2018 tax year, the first year of this tax, homes were considered to have been occupied between 1 January and 30 April 2017. This means for that tax year, homes only needed to be occupied for a further 2 months between 1 May and 31 December to be considered to have been occupied for more than 6 months. 

What is residential property/residential land? 

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.

What do the codes on my assessment mean?

The following is a list of codes used on VRLT assessments, with their meaning:

• HOL — Property is exempt as a holiday home.
• WRK — Property is exempt as land occupied for purposes of attending place of business or employment.
• RES — Property is exempt as it became residential land during the preceding year.
• TFR — Property is exempt as ownership of the property was transferred to you during the preceding year.

Vacancy

What if I allow family and friends to use the property for more than 6 months a year? 

If the property is used and occupied as the principal place of residence of a family member or friend for more than 6 months in a calendar year, the property is not considered vacant and is not subject to the tax. 

However, if the property is only used intermittently or on a casual basis throughout the year, the property is considered vacant and liable for VRLT unless a specific exemption applies or there is a bona fide lease or letting arrangement in place. 

A lease or letting arrangement made for the sole purpose of avoiding the tax is not considered a bona fide arrangement.
You need to apply for this exemption through our VRLT portal.

What if the property is used and occupied by an employee or employees of the corporate land owner?

If the property is used and occupied as the principal place of residence of an employee for more than 6 months in a calendar year, the property is not considered vacant and is not subject to the tax.

However, if the property is only used intermittently or on a casual basis throughout the year by one or more employees, the property will be considered vacant and liable for the tax unless occupation is under a bona fide lease or letting arrangement(s) and the cumulative period of such occupation is more than 6 months. 

A lease or letting arrangement made for the sole purpose of avoiding the tax is not considered a bona fide arrangement.

You need to apply for this exemption through our VRLT portal.

What if I am away on holidays or for work for more than 6 months in a year and leave my home vacant? Am I subject to VRLT?

No. Land that is exempt from land tax because it is used as the principal place of residence of the land owner, or where the land owner is temporarily absent from their principal place of residence, is not subject to VRLT. 

Is vacant property forming part of a deceased estate subject to VRLT? 

It depends. If the property was used and occupied as the owner’s principal place of residence immediately before their death, the property is not subject to VRLT for up to 3 years. However, non-principal place of residence properties of a deceased estate are subject to VRLT if they are vacant for more than 6 months in a calendar year. 

What if a person has moved into a retirement home or residential care facility? Is their home subject to VRLT? 

This depends on whether the former principal place of residence meets the exemption requirements under the existing land tax principal place of residence provisions. If the property is exempt from land tax, it will be exempt from VRLT. 

What criteria is used to determine whether land is capable of being used as a residential care facility, supported residential service, etc.? 

Most of these property types are already defined within the Land Tax Act, as generally they are exempt from land tax. These terms, including the concept of commercial residential premises, are also used in the residential property definition for the foreign purchaser additional duty. The same methodology is used for determining whether land is used or capable of being used as a residential care facility, supported residential service or retirement village.

Requests for advice on whether a property is a commercial residential premises, a residential care facility, supported residential service or retirement village should be directed to the Technical Advice and Review Branch.

Are holiday homes liable?

They can be, although there is an exemption available for properties used by an owner as their holiday home in some circumstances. More information about this exemption, including the conditions which must be met, is provided within the section detailing exemptions.

You need to apply for the holiday home exemption through the VRLT portal.

What if a vacant property is being actively marketed for rent or sale? Is it exempt? 

Generally, if a property is vacant for more than 6 months in a calendar year it is subject to VRLT irrespective of whether it is advertised for rent or sale during that time. 

If a property changes ownership during the year preceding the tax year, it is not subject to VRLT for that tax year. This means that if a property is sold during the year, it is exempt from VRLT in the following tax year. 

However, the change of ownership must occur during the calendar year. It is not enough that the property is available for sale or awaiting settlement as at 31 December. Settlement must take place no later than 31 December.

You need to apply for this exemption through the VRLT portal. 

Does the tax apply to residential properties leased through online platforms?

Yes. If a property is leased through any online platform, such as Airbnb or Stayz, it is subject to VRLT if it is unoccupied for more than 6 months in a calendar year. The 6 months does not need to be continuous.

The owner must notify us through the VRLT portal by 15 January in the following year that the property was vacant for more than 6 months. Failure to notify us may result in an assessment being issued with penalty.

Construction and renovation

How does VRLT apply to properties being constructed or renovated?

Properties being constructed or renovated will not be considered vacant for up to 2 years from when construction or renovation starts. There will, therefore, generally be 2 years where the tax will not apply to a property being constructed or renovated. Under certain circumstances the Commissioner can extend this period.

When does the 2-year period start?

The 2-year period starts from the date the building permit for construction or renovation is issued.

What constitutes renovation?

The renovation must be substantial enough to warrant a building permit, which will trigger the start of the 2-year period when the tax will not apply.

What if building my residential home takes more than 2 years to complete?

If the Commissioner is satisfied that there is an acceptable reason for the construction or renovation exceeding the initial 2-year period, he can extend it. An acceptable reason is usually something beyond the control of the land owner which delayed the start or finish of the work necessary for the home to be occupied.

Capable of being used for residential purposes

What does 'capable of being used for residential purposes' mean?

A property is capable of being used solely or primarily for residential purposes if it:

• can be occupied,
• is occupied, or
• is intended to be occupied

as residences or for residential accommodation, regardless of how long the occupation is for.

This includes land on which there is one or more houses, units or flats which are fit for occupation. It refers to land with premises that provide shelter and contain basic living facilities. 

Residential property in a minor state of disrepair or in need of minor reinstatement are still considered capable of being occupied as a residence. Residential property which does not meet the minimum standards for rental properties under the Residential Tenancies Regulations 2021 may still be considered capable of being used and occupied for residential purposes.

For example, a property that does not have window locks or heating that meet the Residential Tenancies Regulations 2021 standards may still be capable of being used as a residential property and may be liable for VRLT. 

Is an apartment in a serviced apartment building, which is generally leased out, considered ‘capable of being used for residential purposes’ or is this more akin to a hotel room?

A serviced apartment building generally comes within the definition of commercial residential premises. However, an individual apartment in a serviced apartment building will generally not come within this definition.

This means that an apartment purchased individually is capable of being used as a residence, and is therefore residential land for the purposes of VRLT. It will be subject to VRLT if it is vacant for more than 6 months in a year and meets all the other tests.

Does VRLT apply to residential properties used as display homes?

No. VRLT is not applicable to residential land used for commercial activities such as a genuine display home. 

A display home in this case would be regarded as a home designed and built to showcase unbuilt houses or estates, which is made available for open inspection on a regular basis.

However, once a property stops being used as a display home, it is considered to be capable of being used and occupied for residential purposes and will become subject to VRLT if it is left vacant for more than 6 months in a calendar year.

Uninhabitable residences

How does VRLT apply to land with an uninhabitable residence?

Properties with an uninhabitable residence will not be considered vacant for up to 2 years. Therefore, there will generally be 2 years where the tax will not apply to a property that is uninhabitable. Under certain circumstances, the Commissioner can extend this period.

What is an uninhabitable residence?

Whether a residence is uninhabitable will depend on the nature and state of the residence during the calendar year. Generally, a residence will be considered uninhabitable if the amount of work required to return the residence to a state in which it could be used for residential purposes is significant or the residence is incapable of being used for residential purposes. 

If the work required is minimal, the property would be considered capable of being used for residential purposes. A property will not be considered uninhabitable simply because it does not meet certain minimum standards for rental properties under the Residential Tenancies Regulations 2021. 

What if the residence is uninhabitable for more than 2 years?

If the Commissioner is satisfied that there is an acceptable reason for the residence not having been made habitable within the required 2-year period, he can extend it. An acceptable reason is usually something beyond the control of the land owner which delayed or prevented the residence from being made habitable. If the Commissioner is not satisfied that there is an acceptable reason for not being made habitable after 2 years, the land will be considered vacant for the following tax year and liable for VRLT.

Exemptions

Are there any exemptions?

Yes. If your property is exempt from land tax, it is also exempt from VRLT. In addition there are other exemptions which apply to VRLT. These include exemptions for:

• holiday homes (homes owned by businesses or trusts are generally not eligible for this exemption)
• city apartments/homes/units used for work purposes (homes owned by businesses or trusts are generally not eligible for this exemption)
• property transfers during the preceding year
• new residential properties
• newly developed properties where ownership is unchanged.

When is a holiday home exempt?

The holiday home exemption applies to properties used and occupied by the owner or a vested beneficiary of a trust for at least 4 weeks (whether continuous or aggregate) in the calendar year.

This exemption is subject to the following conditions:

• The owner or vested beneficiary must have had a different principal place of residence in Australia in the calendar year.
• The Commissioner of State Revenue must be satisfied that the property is a genuine holiday home.

An owner or vested beneficiary will only be able to claim the exemption for one holiday home in a calendar year. 

Where a holiday home is jointly owned:

• one owner, or the joint owners between them, can satisfy the occupation requirement 
• all joint owners must have a principal place of residence (home) in Australia in addition to their holiday home, but they do not have to own their home.

From 1 January 2025, if a relative of the owner or the vested beneficiary uses and occupies the property as a holiday home for at least 4 weeks, the holiday home exemption will apply. The owner or vested beneficiary must still have a home in Australia in addition to the holiday home.

For the exemption to apply in 2025, it is the use and occupancy in the 2024 calendar year that is relevant.

Homes owned by companies, associations or organisations are not eligible for this exemption.

Owners will need to apply for the holiday home exemption through the VRLT portal by 15 January in the following year. 

Who is a vested beneficiary?

A 'vested beneficiary' in relation to land held on trust, means a beneficiary of the trust who is a natural person and has a vested beneficial interest in possession in the land or is the principal beneficiary of a special disability trust.

What if family and friends use the property as a holiday home? 

The holiday home exemption only applies to a property used and occupied by the owner as their holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year. 

However, from 1 January 2025, if a relative of the owner or the vested beneficiary uses and occupies the property as a holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year, and all other requirements are satisfied, the holiday home exemption may apply.

When is a residential property used for work purposes exempt?

From 1 January 2025, the exemption applies to properties occupied for at least 140 days a year for the purpose of attending the owner’s workplace.

This exemption is subject to the following conditions:

• The owner or a vested beneficiary must have had a different principal place of residence in Australia in that year.
• The place of work must be in Victoria.

Homes owned by companies, associations or organisations are not eligible for this exemption.

Owners must apply for the work accommodation exemption through the VRLT portal by 15 January in the following year. 

For the tax years 2018–24, the workplace had to be located in one of the 16 specified council areas.

What if a property changes ownership during a year?

Land that changes ownership during a calendar year is exempt from VRLT in the following year. For example, if a property is purchased during 2023, it is exempt from VRLT for the 2024 tax year provided settlement takes place no later than 31 December 2023.

Owners must apply for the transfer of ownership exemption through the VRLT portal by 15 January in the following year. 

What if a property is converted to residential premises during a year?

Land that becomes 'residential land' during the year is not subject to VRLT in the following calendar year. For example, if a warehouse is converted into residential apartments during 2023, it is exempt from VRLT for the 2024 land tax year. 

Owners must apply for the conversion exemption by 15 January in the following year. 

What if a property becomes residential property during a year and ownership is unchanged?

Land that becomes residential land during the year is not subject to VRLT for up to 2 following calendar years if ownership remains unchanged since becoming residential land. For example, if a warehouse is converted into residential apartments during 2022 and the residential apartments were not sold and transferred until 2024, they are exempt from VRLT for the 2023 and 2024 land tax years.

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.

Owners must apply for this exemption through the VRLT portal by 15 January in the following year. 

How do I claim an exemption?

Owners of exempt homes must use our online portal to claim an exemption. 

Notifying us

Are land owners required to notify the SRO or does the SRO identify taxable properties?

Owners of land with a vacant residential property are required to notify the State Revenue Office (SRO) by 15 January each year via an online portal. If a property is eligible for an exemption, the land owner is required to notify the State Revenue Office and advise which exemption applies.

If an owner fails to notify the State Revenue Office by 15 January, it is deemed a notification default and penalties under the Taxation Administration Act 1997 may apply. Our revenue ruling outlines the consequences of this. 

Owners who miss the deadline are encouraged to notify the State Revenue Office as soon as possible. Late disclosures are treated more favourably than if land with a vacant residential property is identified as the result of an investigation.

Make a notification via our online portal

The State Revenue Office also undertakes monitoring and compliance activities. 

How do I notify the SRO of a vacant property?

An online portal enables land owners to notify the State Revenue Office of their land with a vacant residential property, claim exemptions and update their contact details. 

Make a notification via our online portal

How does the SRO know if I have vacant property?

The State Revenue Office conducts monitoring and compliance activities to make sure that vacant residences are being declared. Our compliance program includes comparing our data with that of other state and federal agencies, and conducting investigations.

Paying the tax 

Who has to pay VRLT?

The owner of the property as at midnight on 31 December of the preceding year is liable to pay VRLT. 

While the owner of the property is the same as that for land tax purposes, mortgagees in possession and trust beneficiaries are not liable for VRLT.

When do I have to pay the tax? 

Land owners who have notified the State Revenue Office and are liable for VRLT receive assessment notices early in the year for properties vacant in the preceding year. Your assessment will outline when you must pay your land tax. This assessment notice is separate to land tax assessment notices. 

Land owners have 60 days to pay their assessment in full. You can set up instalments via AutoPay to pay over a maximum 17-week period from the issue date on your assessment. AutoPay instalments need to be set up annually as instalment amounts can change each year, depending on your tax liability.

You should pay any VRLT amount on your assessment by its due date even if you are waiting for a decision from us on your matter. If you do not pay your assessment by the due date, interest may accrue daily on any outstanding amount.

How can I pay the assessment?

There are 3 ways to pay your VRLT assessment – via credit or debit card, BPAY, or in instalments via AutoPay.

If you choose AutoPay, you can pay your VRLT assessment in fortnightly, monthly or in 4 equal payments over a maximum 17-week period from the issue date on your assessment.

Find out more about your payment options

Objections

Can I object to a tax assessment?

After receiving a notice of assessment, an owner has 60 days to object. An objection is a formal process of dispute resolution and must be in writing, with full and detailed grounds of objection, including supporting documents. We give a written decision on the objection. If the owner is dissatisfied with this decision, they have 60 days from the date of service of the decision to request a review by the Victorian Civil and Administrative Tribunal (VCAT) or to appeal the decision to the Supreme Court.

You should pay any VRLT amount on your assessment by its due date even if you object and are waiting for a decision from us on your objection. If you do not pay your assessment by the due date, interest may accrue daily on any outstanding amount.

This does not apply to a valuation objection (see below).

What if I disagree with the capital improved value for my property?

You can object to the capital improved value of your land online. You need to object within 2 months of receiving the assessment. If the capital improved value of the property is based on a valuation determined by a valuation authority, the objection is forwarded by the State Revenue Office to the relevant valuation authority for determination.

The Commissioner of State Revenue has no discretion to accept late valuation objections.

Joint owners

How are joint owners assessed?

If you own a vacant residential property with others, all owners are jointly assessed for the tax as if the land was owned by a single person. Unlike land tax, individual joint owners do not receive a secondary assessment for their interest in the property. 

Property clearance certificates

Does the property clearance certificate include outstanding VRLT?

Yes. From 2018, the property clearance certificate includes any outstanding vacant residential land tax owing on the property.

Transitional arrangements

How did VRLT work in its first year (2018)? 

The tax started on 1 January 2018 and was based on occupation in 2017. To give property owners an opportunity to adjust their residential property vacancy status before they were impacted by the tax, all properties were deemed to be ‘occupied’ for the period 1 January to 30 April 2017 inclusive. This meant a property only attracted the tax in 2018 if it was unoccupied for more than 6 months from 1 May 2017 to 31 December 2017.

Did a land owner satisfy the 6-month occupancy test if they lived in the property for more than 2 months from 1 May 2017 to 31 December 2017? 

Yes, provided the land owner, or their permitted occupier, used and occupied the property as their principal place of residence for at least 2 months during the period 1 May 2017 and 31 December 2017. 

The occupancy test is also satisfied if the property was occupied by a natural person pursuant to a lease or short-term letting arrangement for more than 2 months in that period.

Is it correct that if the land owner lived in the property for less than 2 months from 1 May 2017 to 31 December 2017, the property was considered vacant and VRLT applied? 

If the land owner occupied the property for less than 2 months, the property was considered vacant. This assumed that the property was not let out, under a lease or short-term letting arrangement, during the period for more than 2 months.