Vacant residential land tax

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 the absentee owner surcharge and the federal annual vacancy fee. It is also different to land tax, but land that is exempt from land tax is also exempt from VRLT. This includes your home. 

VRLT may apply to:

• residential land with an existing home on it that is vacant for more than 6 months in the calendar year preceding the tax year 
• residential land with a home on it that has been under construction or renovation for 2 years or more
• residential land with a home on it that has been uninhabitable for 2 years or more. 

VRLT for any year is assessed on the previous year’s occupation of the property. For example, VRLT in 2024 is based on a property’s vacancy in 2023. 

VRLT does not apply to 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. 

From 1 January 2025, VRLT’s scope is changing. You can read about the changes announced in December 2023 or read our answers to frequently asked questions. 

From 1 January 2025

Where does VRLT apply?

Prior to 1 January 2025, VRLT applied only to vacant residential land in inner and middle Melbourne. From 1 January 2025, VRLT will apply 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 is vacant in 2024, you may be liable for VRLT in 2025. 

VRLT will 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.

Property under construction or renovation or that is uninhabitable

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 was uninhabitable as at 31 December 2023 will not be regarded as vacant until 31 December 2025. This means it may only be liable for VRLT from the 2026 tax year. 

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.

Vacant residential land tax calculator

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.

More information about unimproved land and VRLT is coming soon.

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 may attract VRLT from 1 January 2026. 

From 1 January 2018 to 31 December 2024

Where does VRLT apply?

VRLT applies only to residential land in inner and middle Melbourne that was vacant in the preceding calendar year.

Vacant land in these council areas may be affected: 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 is VRLT?

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.

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 principal place of residence (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 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. 

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.

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