Vacant residential land tax

Date	Type of residential land	Location of residential land	When the residential land is vacant	Rate of VRLT
2018 onwards	Land capable of being used solely or primarily for residential purposes.	From 2018–2024, land in inner and middle Melbourne. From 2025, anywhere in Victoria except in the alpine resorts.	When the residential land has not been used and occupied as a home for a period of at least 6 months in the year preceding the tax year by either the owner, the owner’s permitted occupant, or a natural person under a lease or short-term letting arrangement.	1-3% of the capital improved value (CIV) of the land, depending on how many consecutive years the land has been liable for VRLT.
2018 onwards	Land with a residence under construction or renovation.	From 2018–2024, land in inner and middle Melbourne. From 2025, anywhere in Victoria except in the alpine resorts.	If at 31 December of the year preceding the tax year, the residence on the land has been under construction or renovation for 2 years or more.	1-3% of the CIV of the land, depending on how many consecutive years the land has been liable for VRLT.
2020 onwards	Land with an uninhabitable residence.	From 2018–2024, land in inner and middle Melbourne. From 2025, anywhere in Victoria except in the alpine resorts.	If at 31 December of the year preceding the tax year, the residence has been uninhabitable for 2 years or more.	1-3% of the CIV of the land, depending on how many consecutive years the land has been liable for VRLT.
2026 onwards	Undeveloped residential land.	Metropolitan Melbourne.	If at 31 December of the year preceding the tax year, the residential land has been undeveloped for a continuous period of 5 years or more.	1% of the CIV.

Prior to 1 January 2026, VRLT does not apply to land without a home on it (sometimes called undeveloped land), commercial residential premises, residential care facilities, supported residential services, retirement villages or land in alpine resorts.

From 1 January 2026, VRLT is extending to land in metropolitan Melbourne that has remained undeveloped for a continuous period of 5 years or more and is capable of residential development. This includes land without a home on it, a residence that was partially built but abandoned and land with a residential unit such as an apartment, unit or flat that has a partially completed fit out but has not been occupied.

From 1 January 2026

Where does VRLT apply?

VRLT is extending to include land in metropolitan Melbourne that has remained undeveloped for a continuous period of 5 years or more and is capable of residential development. This includes:

• land without a home on it
• land with a residence that was partially built but abandoned
• land with a residential unit, such as a unit, apartment or flat, that has a partially completed fit out but has not been occupied. 

Metropolitan Melbourne is made up of the Banyule, Bayside, Boroondara, Brimbank, Cardinia, Casey, Greater Dandenong, Darebin, Frankston, Glen Eira, Hobsons Bay, Hume, Kingston, Knox, Manningham, Maribyrnong, Maroondah, Melbourne, Melton, Merri-bek, Monash, Moonee Valley, Mornington Peninsula, Nillumbik, Port Phillip, Stonnington, Whitehorse, Whittlesea, Wyndham, Yarra and Yarra Ranges council areas. 

The residential status of land depends on its zoning under the relevant local planning scheme. Land currently used or under development for a non‑residential use (e.g. commercial or industrial use) is excluded.

Additionally, land that is intended to be solely or primarily used or developed for a non-residential use and there is an acceptable reason for the land not yet being used or developed in that way is excluded. 

The land must be vacant for a continuous period of 5 years or more to attract VRLT. The Commissioner has a discretion to extend this 5-year period in accordance with guidelines published by the Treasurer. These will be available shortly.

This means for this type of land to become liable to VRLT in 2026, it must have been undeveloped and capable of residential development since midnight on 31 December 2020. 

If the land is sold, the new owner(s) has a further 5 years to begin construction before VRLT applies. This 5-year period provides adequate time for an owner of residential land to begin construction of a residence before it is regarded as vacant residential land. 

Exemptions may be available for:

• undeveloped land incapable of being used or developed for residential purposes. This may be because of, for example, the size or shape of the land, its natural features or its environmental condition. The exemption is not intended to apply in cases where development is merely uneconomical or inconvenient. It is intended to apply when development is practically impossible
• undeveloped residential land that is contiguous with (adjoins) a principal place of residence. Common examples of contiguous land are a garden, swimming pool or tennis court.

How much is VRLT?

For undeveloped residential land in metropolitan Melbourne, the rate is 1% of the CIV of the land per year.

From 1 January 2025

Where does VRLT apply?

VRLT applies to residential land anywhere in Victoria if the land is vacant in the preceding calendar year. This means that if you own residential land anywhere in Victoria that was vacant in 2024, you may be liable for VRLT in 2025. Vacant has a particular meaning.

VRLT does not apply to any residential land in the alpine resorts of Mt Baw Baw, Mt Buller, Mt Hotham, Mt Stirling, Falls Creek and Lake Mountain. To determine whether your land is in an alpine resort, you can search your address on VicPlan. Under Property Details, if your address is listed as an alpine resort in the LGA, the land is exempt. If the LGA listed is 'Alpine' then the land is not in an alpine resort, as that refers to the Alpine Shire Council.

Property under construction or renovation or that is uninhabitable

Residential land in outer Melbourne and regional Victoria with a residence that was under construction or renovation and was uninhabitable as at 31 December 2023 will only be regarded as becoming vacant on 31 December 2025. This means the first year it may be liable for VRLT is 2026. 

You can read more about these properties on our FAQ page. 

How much is VRLT?

From 1 January 2025, a progressive rate of VRLT applies to non-exempt vacant residential land across all of Victoria. VRLT is calculated on the capital improved value (CIV) of taxable land. This 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.

The progressive rate re-sets where there is a change in ownership or where the land was not liable to VRLT in the preceding calendar year. 

Vacant residential land tax calculator

From 1 January 2018 to 31 December 2024

Where did VRLT apply?

From 1 January 2018 to 31 December 2024, VRLT applied only to residential land in inner and middle Melbourne that was vacant in the preceding calendar year.

Before 1 January 2025, VRLT only applied to these council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Merri-bek (formerly Moreland), Port Phillip, Stonnington, Whitehorse and Yarra.

How much was VRLT?

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

What does 'vacant' mean?

Land with an existing home on it 

This land 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 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 have been actually used and occupied for more than 6 months.

It is also 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.

Land with a home under construction or renovation or an uninhabitable home

Residential land is also considered vacant if, at the end of the calendar year preceding the tax year: 

• the land has a residence that has been under construction or renovation for more than 2 years since the building permit was issued, and that work is not complete
• the land has a residence that has been uninhabitable for 2 years or more. 

The Commissioner of State Revenue can extend the period these lands are considered not vacant if he is satisfied that there is an acceptable reason for the delay in completing construction or renovation or making the land habitable.

For residential land outside of inner and middle Melbourne (i.e. outer Melbourne and regional Victoria) with a residence that was under construction or renovation, or that was uninhabitable, as at 31 December 2023, the date on which the construction or renovation commenced, or when the residence became uninhabitable, is deemed to be 31 December 2023. These residential lands will not be regarded as vacant until 31 December 2025. This means they may only be liable for VRLT from the 2026 tax year.

Going forward, residences undergoing significant renovations or construction will not be considered vacant for up to 2 years from the date a building permit for the construction or renovation was issued. Land with an uninhabitable residence will not be considered vacant for up to 2 years. 

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. 

Exemptions

Homes that are exempt from land tax are also exempt from vacant residential land tax.

There are also some specific exemptions from VRLT, but an exemption from VRLT does not mean that your property is exempt from land tax.

Exemptions from land tax

Exemptions from VRLT

Notification requirements

VRLT for any year is assessed on the previous year’s occupation of the property. VRLT in 2025 is based on a property’s vacancy in 2024. If you think you are liable for VRLT in 2025, you must notify us. 

Use our online portal to notify us if you own residential land anywhere in Victoria with a home on it that was capable of being used for residential purposes but was unoccupied for more than 6 months in 2024.

Contact us by email to notify us if you own residential land in inner and middle Melbourne with a residence that was under construction or renovation, or that was uninhabitable, for 2 years or more as at 31 December 2024.

You do not need to contact us by 15 January 2025 if you own land outside inner and middle Melbourne with a residence that was under construction or renovation or that was uninhabitable as at 31 December 2023. This land may be liable for VRLT only from the 2026 tax year. Owners who are required to notify us but miss the 15 January 2025 deadline are encouraged to notify us about vacant property as soon as possible through our portal. 

Owners who are required to notify us but miss the 15 January 2025 deadline are encouraged to notify us about vacant property as soon as possible through our portal. 

Owners of residential land in inner and middle Melbourne with a residence that was under construction or renovation, or that was uninhabitable, for 2 years or more as at 31 December 2024, who miss the 15 January 2025 deadline, are encouraged to notify us as soon as possible by email. 

You must notify us by 15 January 2026 through our VRLT portal if you have owned land from 31 December 2021 or earlier in metropolitan Melbourne that has remained undeveloped for a continuous period of 5 years or more as at 31 December 2025 and is capable of residential development. 

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.

If you have already made a notification, you only need to make a new one if your circumstances have changed.

If you have recently notified us about your vacant land and are liable to pay VRLT, you will receive your assessment notice between April - June 2025.
 
If you recently requested an exemption, we will let you know of the outcome prior to sending you an assessment. You will not receive an assessment if your exemption is approved, and you have no other liable properties.

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, we encourage you to contact us.

Contact us with a tip-off