Understanding the Updated Vacant Residential Land Tax (VRLT)

Starting January 1, 2025, the Victorian government will be updating the Vacant Residential Land Tax (VRLT). This will affect people with empty homes and land in both Metropolitan Melbourne and Regional Victoria. Here’s a simple breakdown of what you need to know…

What is Vacant Residential Land? 

Vacant residential land means any residential land with a home on it in Victoria that isn’t being used and doesn’t qualify for an exemption. 

What is the Vacant Residential Land Tax (VRLT)? 

The VRLT is a tax on empty residential land. Here’s how it works…

  • First Year: The tax is 1% of the land’s value (based on your council rates notice). 
  • Second Year: The tax increases to 2% if the land is still empty. 
  • Third Year and Beyond: The tax goes up to 3% if the land remains vacant.

Exemptions from VRLT

Some types of land are not subject to the VRLT, including:

  • Your Main Home (Principal Place of Residence)
  • Farmland (Primary Production Land)
  • One Holiday Home: Must be used by the owner or immediate family for at least four weeks a year (these weeks don’t need to be consecutive).
  • Retirement or Support Villages

If you own more than one holiday home, only one property will be exempt unless another exemption applies to the additional property

Special Cases

  • Holiday Homes in Trusts: Additional rules may apply. Contact us for more information.
  • Land from Deceased Estates: Land transferred to an executor is exempt for up to three years or until the estate is settled.

New Changes Effective January 1, 2026

From January 1, 2026, empty land zoned residential in Metropolitan Melbourne will also be taxed. Owners have five years to develop the land before it’s considered vacant. 

Additional Exemptions 

  • Land Next to Holiday Homes: Land used for the owner’s enjoyment, like tennis courts, will also be exempt.

How to Know If Your Land is Considered Vacant 

To find out if your land is vacant, check its use in the previous year. Land is considered vacant if: 

  • It hasn’t been lived on for at least six months (the months don’t need to be consecutive). 
  • The person living there must be the owner or someone with a lease or short-term rental agreement. 
  • Simply having the property ready to lease, without an active lease, doesn’t count. 
  • Properties under construction have a two-year exemption. 

Reporting and Penalties 

If your property isn’t exempt, you must tell the State Revenue Office (SRO) of Victoria by January 15 of the following year. Not reporting can lead to penalties of up to 90% if the SRO thinks it was intentional.

Need a hand?

If you’re unsure whether you need to register with the SRO or have any concerns about these changes, please reach out to our team at [email protected] for assistance.

We’re here to help you navigate these updates smoothly.