Certain properties are exempt from vacant residential land tax.
Exempt properties and how to apply
Exemptions from vacant residential land tax (VRLT) include:
- land that is exempt from land tax, including your principal place of residence
- holiday homes
- properties that changed ownership in the previous year
- land that recently became residential land
- land incapable of residential development
- work accommodation
- land with a residence that was under construction/renovation or uninhabitable in the previous year.
VRLT does not apply to commercial residential premises, residential care facilities, supported residential services or retirement villages as defined by the Land Tax Act 2005. It also does not apply to land in alpine resorts or Dinner Plain village.
Apply for an exemption
If you think your land is exempt, you need to make a notification before you can apply for an exemption.
We will contact you to let you know the outcome of your application.
Holiday home exemption
If you own a holiday home, it is exempt from vacant residential land tax if you or close relatives use it for at least 4 weeks in the calendar year.
The 4 weeks do not have to be consecutive. You can add up use by different people. For example, if you use the home for 2 weeks and your children use it for 2 weeks, you have used it for 4 weeks.
Close relatives include:
- your spouse or domestic partner
- your children and their partners
- your siblings and their partners and children
- your parents, grandparents and grandchildren.
Your home (principal place of residence, or PPR) must also be in Australia. It does not matter if you own or rent.
We must be satisfied the property is a genuine holiday home. We will consider:
- the location of the holiday home
- how and when you use the holiday home
- the distance between your actual home and the holiday home.
Keeping a diary of who uses the property, and the dates they use it, is a great way to support your claim.
You can only claim one holiday home exemption per year.
Joint owners
A joint ownership can also claim the holiday home exemption. All joint owners must have a PPR in Australia.
Each joint ownership can only claim one holiday home exemption per year. But members of that joint ownership can claim a holiday home exemption on a different property, if eligible under a different joint ownership or as an individual.
Contiguous land
From 1 January 2026, land adjoining a holiday home is also exempt if it is:
- undeveloped
- owned by the same owner as the holiday home land
- contiguous with the holiday home land
- enhances the holiday home land
- is used solely for the private benefit and enjoyment of the people using the holiday home.
Common examples include a garden or tennis court on separate land adjoining the land with the holiday home.
Deceased estates
The holiday home exemption may continue to apply to a property if the owner dies, and the deceased owner’s relative:
- has a PPR in Australia
- uses the holiday home for at least 4 weeks in the previous calendar year.
The exemption continues until:
- the third anniversary of the owner’s death, or
- the deceased owner’s interest in the land vests in another person.
This also applies to a sole shareholder of a corporation that owns the land.
Trusts and corporations
A vested beneficiary of a trust to which the land is subject can also claim the holiday home exemption.
A vested beneficiary is:
- a beneficiary of a trust who is a natural person and has a vested beneficial interest in possession in the land, or
- the principal beneficiary of a special disability trust.
From 1 January 2025, a landowning corporation or trustee of a trust is eligible for this exemption if:
- the owner of the land has continuously owned the land, or the land has been continuously subject to the same trust, since 28 November 2023
- there have been no changes in beneficial ownership of the land since 28 November 2023, except for transfers between relatives or transfers to change the trustee (contracts signed before but settled after that date are eligible)
- one or more eligible natural persons had a PPR in Australia and used the holiday home for at least 4 weeks (continuous or aggregate) in the calendar year as follows:
|
Owner of land |
Natural persons who must have a PPR in Australia |
Natural persons who must occupy holiday home |
|---|---|---|
|
Corporation |
Shareholders who owned, directly or indirectly, at least 50% of the shares in the company |
The shareholders or their relatives |
|
Trustee of unit trust scheme |
Unitholders who owned, directly or indirectly, at least 50% of the units in the scheme |
The unitholders or their relatives |
|
Trustee of fixed trust |
Beneficiaries who held, directly or indirectly, at least 50% of the beneficial interest in the trust property |
The beneficiaries or their relatives |
|
Trustee of discretionary trust |
Specified beneficiaries of the trust or their relatives |
The specified beneficiaries or their relatives |
A specified beneficiary is a beneficiary who is specifically named in the trust deed or specifically declared in writing pursuant to the trust deed as a beneficiary to or in whom, by the terms of the trust, the whole or any part of the trust income or property may be distributed or vested:
- in the event of the exercise of a power or discretion in favour of the beneficiary (whether or not that power is presently exercisable), or
- in the event that a discretion conferred under the trust is not exercised.
For the purposes of the PPR requirement, any shares or units owned or beneficial interest held by the trustee of a discretionary trust are taken to be owned or held by a natural person who is a specified beneficiary of the discretionary trust.
Change of ownership
When a property changes ownership during a calendar year, it is exempt from VRLT the following year.
This exemption only applies when ownership actually changes. It is not enough to be listed for sale or be awaiting settlement.
Example
A vacant home in Bairnsdale is listed for sale on 1 February 2025. It does not sell until 15 September 2025. Settlement occurs on 1 November 2025.
The home is exempt from VRLT in 2026.
Land becomes residential land
In the last calendar year
When land becomes residential land during the year, it is exempt from VRLT the following year.
For example:
- a warehouse converted into residential apartments during 2025 is exempt in 2026
- construction of a new home completed in 2025 is exempt in 2026.
In the last 2 calendar years, where ownership is unchanged
Since 2022, land that becomes residential land is exempt from VRLT for up to 2 years, if the land:
- has not been used or occupied
- did not change ownership.
For example, a warehouse is converted into residential apartments during 2024. Some apartments remain unsold until 2025. The unsold apartments may be exempt in 2025 and 2026.
In the last 3 calendar years, where ownership is unchanged
From 1 January 2025, this exemption was extended to 3 years, if:
- the land has not been used or occupied
- the land did not change ownership
- the owner made genuine and reasonable efforts to sell the land.
The owner must try to sell at or below the price they expected to receive when construction began.
After 3 years, VRLT applies at a rate of 1% of capital improved value until it is sold.
You must make a notification before you can apply for this exemption. You must apply for this exemption on or before 15 January of the tax year and provide any information requested by the SRO to determine if the exemption applies.
Land incapable of residential development
From 1 January 2026, VRLT applies to land in metropolitan Melbourne capable of residential development that has remained undeveloped for a continuous period of 5 years or more.
But land that cannot be used or developed for residential purposes is exempt.
We will consider:
- the physical attributes of the land, such as its size or shape, natural features or environmental condition
- factors that prevent lawful use or development, such as a planning scheme, restrictive covenant, environmental action notice, improvement notice or prohibition notice issued under the Environment Protection Act 2017.
Land adjoining your PPR
Undeveloped residential land adjoining your PPR is exempt if it is:
- owned by the owner of the PPR land
- contiguous with (adjoining) the PPR land or separated only by a road, railway or similar area you can move around
- enhances the PPR land
- used solely for the private benefit and enjoyment of the people in the PPR.
Common examples include a swimming pool or tennis court.
Work accommodation
A property used by the owner for work purposes is exempt, if:
- the owner or vested beneficiary uses it for at least 140 days (continuous or aggregate) to attend their workplace in Victoria
- the owner or vested beneficiary has a PPR in Australia.
Before 2025, the workplace had to be in one of 16 council areas in inner and middle Melbourne [link to bookmark on ‘understanding VRLT’ page listing relevant council areas].
Example
Rima lives in Mildura with her family. Rima’s job requires her to work 3 days a week in the Melbourne office.
Rima owns an apartment in Docklands which she uses while she is working in Melbourne.
Rima uses the apartment for 148 days to attend work in 2025. That means the property is exempt from VRLT in 2026.
Properties owned by companies, associations or organisations cannot claim this exemption.
Corporate landowners
If a corporate landowner owns a property to house employees, VRLT applies unless:
- an employee uses it as their PPR for more than 6 months in the calendar year
- multiple employees use it under bona fide leases or letting arrangements for a total of more than 6 months in the calendar year.
Land in alpine resorts and Dinner Plain
VRLT does not apply to any taxable land in the alpine resorts of Mt Baw Baw, Mt Buller, Mt Hotham, Mt Stirling, Falls Creek and Lake Mountain. It also does not apply to land in Dinner Plain.
You can check whether your land is in an alpine resort or Dinner Plain through VicPlan.
Residence that is under construction/renovation or uninhabitable
From 1 January 2026, there is an exemption for land with a residence that is under construction/renovation or uninhabitable at any time during the previous year.
This ensures you don’t pay VRLT on a home that can’t be lived in for a significant period. There is no minimum period of construction or renovation.
Other types of land
VRLT does not apply to:
- display homes (a home designed and built to showcase unbuilt houses or estates, which is made available for open inspection on a regular basis).
Unless used for more than 6 months of the calendar year, VRLT does apply to:
- serviced apartments purchased individually
- properties listed for short stays, which may also attract the short stay levy
- properties used by family and friends intermittently, unless the holiday home exemption applies.
