What is vacant residential land tax (VRLT)

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. 

If your residential property was vacant for more than 6 months in the preceding calendar year, you may be subject to vacant residential land tax.

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 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.

Land that is exempt from land tax, such as your principal place of residence, is also exempt from vacant residential land tax (VRLT).

Residential and Non-residential land

Residential Land

Types of residential land	Considered vacant if not occupied for
Land with a home on it	> 6 months
Uninhabitable residence	≥2 years
Residence under construction/renovation	> 2 years (from issue date of building permit)

Residential land does not include land without a home on it (sometimes called unimproved land). Non-residential Land:

•Commercial residential premises

•Residential care facilities

•Supported residential services

•Retirement village services

•Display homes

2025 VRLT changes

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.

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. 

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.

2026 VRLT changes

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.

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

VRLT 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.

There are additional exemptions from VRLT that may apply to your residential land:

1. Holiday Home exemption

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

To qualify for this exemption, the owner or vested beneficiary must also have a principal place of residence (home) in Australia in addition to their holiday home but they do not have to own their home.

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

From 1 January 2025, a relative of the owner or a relative of a vested beneficiary will be able to satisfy the 4-week use and occupation requirement. 

From 1 January 2025, a company or trustee of a trust is eligible for this exemption if: 

• They have continuously owned the home since 28 November 2023, when the Government announced this measure.
• There have been no changes in beneficial ownership of the land since 28 November 2023, except for transfers between relatives.
• One or more eligible natural persons used another property in Australia as their PPR in the preceding tax year and used and occupied the holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year 

2. Work accommodation

This exemption applies to a property used and occupied by the owner for work purposes, which meets the following requirements: 

• The property must be occupied by the owner or vested beneficiary for at least 140 days (whether continuous or aggregate) in a calendar year for the purpose of attending their workplace or conducting business.
• The owner or vested beneficiary must have a principal place of residence in Australia. 
• From the 2025 calendar year, the workplace must be in Victoria.
• For the 2018–24 calendar years, the workplace had to be in one of the 16 specified council areas.

3. Change of Ownership

Properties that change ownership during a calendar year are exempt from VRLT in the following year. 

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 of the year preceding the tax year.

For example, a vacant residential property sold and transferred during 2023 is exempt for the 2024 VRLT year, provided settlement takes place no later than 31 December 2023.

4. New residential land

Land that becomes residential land during the calendar year is not subject to VRLT in the following year. 

In 2022, a new exemption was introduced to allow land that becomes residential land during a calendar year to not be subject to VRLT for up to 2 tax years.

This exemption will only apply where the land has not been used or occupied and the ownership of the land remains unchanged.

From 1 January 2025, the 2-year exemption is extended to allow a maximum exemption period of 3 years, provided the owner has made genuine and reasonable efforts to sell the land during that 3-year period and the land has not been used and occupied. 

If the property continues to be unused, unoccupied and unsold from 1 January 2025 onwards, the land will be liable for VRLT at the rate of 1% until it is sold.

Make a VRLT Notification

If you own a property that was unoccupied for more than 6 months during a calendar year, you must lodge a notification via our online portal notify us about the property  by 15 January each year if:

• residential land is vacant
• an exemption applies
• the land is no longer vacant, or
• an exemption ceases to apply/exemption changes.

If you have made a VRLT notification in a previous year and circumstances have not changed, subsequent notification does not need to be made.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.