In short
Victoria’s vacant residential land tax (VRLT) is an annual tax on residential land left vacant for more than 6 months of the previous calendar year. Since 2025 it applies across the whole state; before 2025 it covered only 16 inner and middle Melbourne council areas. It is charged on the land’s capital improved value, with no threshold: 1% for the first year liable, 2% for the second consecutive year and 3% from the third. Owners must notify the State Revenue Office by 15 February each year, even when they believe an exemption applies. Your home (principal place of residence) is exempt.
What counts as vacant
A property is vacant if nobody lived in it for at least 6 months of the previous year: not the owner, a permitted occupant, or a person under a genuine lease or short-term letting arrangement. The 6 months do not have to be continuous or by the same occupant. A property only listed for rent, sale or short-stay use does not count as occupied.
The tax looks back one year: a home vacant in 2025 may give rise to VRLT payable in 2026.
Which land is caught
| Situation | When VRLT can apply |
|---|---|
| Home not lived in | Vacant for more than 6 months of the previous calendar year |
| Home under construction, renovation or uninhabitable | For 2 years or more, as at 31 December (the SRO can extend this period for an acceptable reason) |
| Undeveloped land in metropolitan Melbourne | From 1 January 2026, land undeveloped for a continuous 5 years or more that is capable of residential development (the 5 years can have started before 2026) |
VRLT does not apply to commercial residential premises, residential care facilities, supported residential services, retirement villages, or land in the alpine resorts (Mt Baw Baw, Mt Buller, Mt Hotham, Mt Stirling, Falls Creek, Lake Mountain) or Dinner Plain. Display homes are exempt.
Rates (SRO page updated 29 September 2026)
| Land | Rate |
|---|---|
| First year liable | 1% of capital improved value |
| Second consecutive year | 2% |
| Third consecutive year or more | 3% |
| Undeveloped land in metropolitan Melbourne (5 years or more) | 1% |
| New residential land unused, unoccupied and unsold for more than 3 years | 1% |
Before 2025 the rate was 1% for all properties. There is no tax-free threshold and no COVID levy. On a home with a capital improved value of $800,000, the first year at 1% would be $8,000, by simple application of the published rate. The SRO publishes an official VRLT calculator.
The main exemptions
- Land exempt from land tax, including your principal place of residence. See land tax by state.
- Holiday home: you or your relatives use it for at least 4 weeks in the calendar year (not necessarily consecutive), and your principal place of residence, owned or rented, is in Australia. Only one holiday home exemption per year. The SRO looks at location, use and distance from your home to decide whether it is a genuine holiday home. Joint owners can claim it if all of them have their home in Australia.
- Work accommodation: a natural person owner (or vested beneficiary of a trust) uses the property for at least 140 days in the year to attend a workplace in Victoria, and has a principal place of residence in Australia. Companies cannot claim it; a company housing employees is exempt only if they occupy the property for more than 6 months in the year.
- Change of ownership: a property whose ownership actually changes during a year is exempt the following year. Being listed for sale or awaiting settlement is not enough.
- Newly built or newly residential land: exempt the year after it becomes residential, and up to 2 years if it stays unused with no change of owner. From 2025, up to 3 years if the owner also makes genuine and reasonable efforts to sell at or below the price expected when construction began (apply by 15 February). After that, 1% applies until sale.
- Significant renovations (from 1 January 2026): exempt when works carried out entirely within the previous year made the home unusable, with no minimum construction period.
- Deceased estates: the holiday home exemption can continue for up to three years after the owner’s death if a relative with a home in Australia used it for at least 4 weeks.
- Undeveloped land next to your home or holiday home and used only for the private enjoyment of its occupants, and land that cannot lawfully or physically be developed for housing.
Trusts and companies have additional conditions, tied to ownership since 28 November 2023, set out on the SRO exemptions page.
Notification, assessment and penalties
- Notify by 15 February through the SRO’s VRLT portal if your land was vacant, under construction or uninhabitable for 2 years or more, or undeveloped as described above, even if you think it is exempt. If you have notified before, you only need to notify again if your circumstances change.
- The SRO sends assessments before 30 June, listing each vacant property, its taxable value, rate and any exemption.
- Report an error in the assessment through the portal within 60 days.
Failing to notify by 15 February may lead to penalty tax; the SRO advises notifying as soon as possible if you missed the deadline. The VRLT pages do not state penalty amounts and refer to the SRO’s general penalty tax and interest page.
Other taxes on the same property
VRLT is separate from Victorian land tax and the absentee owner surcharge, and from the federal vacancy fee for foreign owners run by the ATO: see foreign owner vacancy fee. A Victorian home let through short-stay platforms counts as occupied for VRLT when it is actually let; the separate levy on those stays is covered in short stay levy in Victoria. This guide covers Victoria only: Payotte did not compare vacancy taxes in the other states and territories.
Which professional to consult
A conveyancer or lawyer can check the VRLT and land tax position at settlement when you buy or sell in Victoria (conveyancers). For the holiday home or work accommodation exemption, the SRO portal is the place to claim; a tax adviser can help where a trust or company owns the land.
Frequently asked questions
Do I pay VRLT on my own home?
No. Land exempt from land tax, including your principal place of residence, is exempt from VRLT.
Does advertising my property for rent stop it counting as vacant?
No. A property listed for rent, sale or short-stay use is not occupied unless someone actually lives in it, or rents it, for at least 6 months of the year in total.
Does VRLT apply outside Melbourne?
Yes. Since 2025 it applies to residential land across Victoria. The undeveloped land rule from 2026 applies only in metropolitan Melbourne.
When must I notify the SRO?
By 15 February each year, through the VRLT portal, even if you believe an exemption applies.
Is there a tax-free threshold?
No. VRLT is charged on the full capital improved value, with no threshold.
Is VRLT the same as the foreign owner vacancy fee?
No. VRLT is a Victorian state tax; the vacancy fee is a federal charge on foreign owners administered by the ATO. Both can apply to the same property.
General information drawn from the official sources cited and dated on this page. It is not legal, tax or financial advice: for your own situation, ask a licensed professional.
More guides on owning
- Council rates in Australia: how they work, by state
- Land tax by state: thresholds, home exemption, surcharges
- Rental property deductions and negative gearing (ATO rules)
- Short stay levy in Victoria (and the NSW short-term rental rules)
- Vacancy fee for foreign owners: the 183-day rule and the annual return
Sources
- Understanding vacant residential land tax (State Revenue Office Victoria) (consulted 21 October 2026)
- Vacant residential land tax, current rates (State Revenue Office Victoria) (consulted 21 October 2026)
- Exemptions from vacant residential land tax (State Revenue Office Victoria) (consulted 21 October 2026)
- Make a vacant residential land tax notification (State Revenue Office Victoria) (consulted 21 October 2026)