Land that is exempt from land tax, such as your principal place of residence (PPR) (home), is also exempt from vacant residential land tax (VRLT). Find out more about land tax exemptions.
There are additional exemptions from VRLT that may apply to your residential land. However, an exemption from VRLT does not mean that your land is exempt from land tax.
Residential land includes:
- land with a home on it that is capable of being used solely or primarily for residential purposes
- land with a home which is under construction or renovation
- land with a home that is uninhabitable.
Residential land does not include land without a home on it (sometimes called unimproved land), commercial residential premises, residential care facilities, supported residential services, retirement villages or land in alpine resorts.
Residential land is considered vacant if:
- in the case of a home capable of being used for residential purposes, it is not occupied for 6 months or more in the preceding calendar year.
- in the case of a home that is under construction or renovation, if it has been more than 2 years since the building permit was issued.
- in the case of a home that is unhabitable, if it has been unhabitable for 2 years or more.
Here are the VRLT exemptions:
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 2024 is exempt for the 2025 VRLT year, provided settlement takes place no later than 31 December 2024.
The property becomes residential land
During the preceding calendar year
Land that becomes residential land during a calendar year is not subject to VRLT in the following year.
For example, a warehouse converted into residential apartments during 2024 is exempt for the 2025 calendar year. Similarly, where construction of a new home has just been completed, the property is exempt for the following tax year.
During the 2 preceding calendar years, where ownership is unchanged
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.
For example, a warehouse is converted into residential apartments during 2023. Some of the apartments remain unsold until 2024. The unsold apartments may be exempt for the 2024 and 2025 calendar years if they were not used or occupied and did not change ownership from when they were completed up to the date they were sold.
During the 3 preceding calendar years, where ownership is unchanged
From 1 January 2025, the 2-year exemption is extended to allow a maximum exemption period of 3 years, provided the land was not used or occupied, did not change ownership, and the owner made genuine and reasonable efforts to sell the land during that 3-year period.
After the 3-year period, 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% of its capital improved value until it is sold.
A property owner must have applied for and received the 3-year exemption before the concessionary rate of 1% is applied. Once they have the exemption, the concessionary rate will be applied automatically for the following tax years. There is no need for a property owner to apply for the concessionary rate.
The 2026 VRLT year is the first year the concessionary rate can apply as it is based on 2025 vacancies.
Holiday home exemption
An 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 that home.
For example, Rose lives in New Zealand. She owns a holiday home in inner Melbourne. In 2023 she used her holiday home for 6 weeks. In 2024, her holiday home will be subject to VRLT because she did not live in Australia in 2023.
Rose returns to live in Adelaide in 2024. She uses her Melbourne holiday home for 6 weeks. In 2025, her holiday home will not be subject to VRLT because she used her holiday home for at least 4 weeks and had an Australian PPR in 2024.
The Commissioner of State Revenue must also be satisfied that the property was a genuine holiday home, having regard to its location and distance between the owner or vested beneficiary’s actual home and the holiday home, as well as the frequency and nature of its use.
An owner or a vested beneficiary will only be able to claim one holiday home exemption in a calendar year.
Where a holiday home is jointly owned:
- 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, and
- at least one owner, or the joint owners between them, must satisfy the 4-week occupation requirement.
The same joint ownership can only be entitled to one holiday home exemption for a tax year if the requirements are met. However, this does not prevent one of the joiner owners, either in their individual capacity or together with other joint owners under a different joint ownership, from being entitled to a holiday home exemption in respect of another property in the same tax year.
From 1 January 2025, a relative of the owner or a relative of a vested beneficiary can satisfy the 4-week use and occupation requirement.
Additionally, from 1 January 2025, the sole shareholder of a landowning corporation or trustee of a trust is eligible for this exemption if:
- the sole shareholder has continuously owned the home, or the home has been continuously subject to the same trust, 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 or transfers for the purpose of making a change to the trustee
- 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 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 |
The use of the property by different eligible people can be aggregated to meet the 4-week occupancy requirement. However, the use cannot be concurrent.
Corporations or trustees that entered into a contract to purchase a holiday home on or before 28 November 2023 but settle after that date are also eligible.
Deceased estates
Also, from 1 January 2025, the holiday home exemption may continue to apply for a specified period after the owner, or sole shareholder of a corporation that owns the home, passes away. The exemption will continue provided a relative of the owner or the sole shareholder of the landowning corporation:
- uses and occupies other land in Australia as their PPR, and
- uses and occupies the holiday home for a period of at least 4 weeks (whether continuous or aggregate) in the calendar year.
The exemption continues until the earlier of:
| Owner | Sole shareholder |
|---|---|
|
|
Work accommodation exemption
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.
- 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.
For example, John lives in Mildura with his family, but his job requires him to work 3 days a week in the city. John owns an apartment in Docklands which he uses while he is working in Melbourne. If John uses his apartment for more than 140 days to attend work, the property is exempt from the vacant residential land tax in the following tax year.
Properties owned by companies, associations or organisations are not eligible for this exemption.
What if the property is used and occupied by an employee or employees of the corporate landowner?
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.
Notify us
Use the online portal to notify us of vacant residential properties, apply for exemptions and update your contact details.
Read our FAQs for additional information.
