The Victorian Government introduced Vacant Residential Land Tax (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.
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.
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.
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.
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.
Non-exempt vacant residential land across all of Victoria remains subject to the progressive rates explained above.
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.
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. From 1 January 2025, the 4-week use and occupation requirement can also be satisfied by:
- relatives of the owner or vested beneficiary
- eligible shareholders or beneficiaries of a company or trust or their relatives
- the property was occupied by the owner or vested beneficiary for at least 140 days of that year for the purpose of attending their workplace or business, and the owner or vested beneficiary has a PPR in Australia (homes owned by companies, associations or organisations are generally not eligible for this exemption).
It is important to note that if you are eligible for an exemption and want to claim an exemption from VRLT, you must apply via the SRO’s VRLT portal when you make your vacant residential land notification.
Notification requirements
If you own a property that was unoccupied for more than 6 months during a calendar year, you are required to notify the SRO about the property by 15 January of the following year using SRO’s online portal.
