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Vacant Residential Land Tax (Victoria)

Vacant Residential Land Tax (Victoria)

The Victorian State Government has a number of legislations in place which affect property owners. In addition to the current Land Tax and the Short Term Rental Tax, property owners may also be subject to the Vacant Residential Land Tax (VRLT).

Up until 31 December 2024, the VRLT applied to properties in select inner and middle suburbs of Melbourne. From 1 January 2025, the VRLT has been extended to applicable vacant residential property in Victoria with regional areas and government holdings included if these had been vacant in the 2024 calendar year. Only some alpine resort areas are still exempt.

The VRLT namely applies to residential land with a home on it that is left vacant for more than 6 months in the preceding calendar year, residential land with a home on it that has been under construction/renovation for 2 years or more, or residential land with a home on it that has been ‘uninhabitable’ for 2 years or more. The VRLT is applied at a progressive rate and is based on the capital improved value of the property.

There are some exemptions and concessions that can apply for VRLT. If a property is exempt from Land Tax, then VRLT will not apply. Other concessions that might apply include:

  • Deferring VRLT into the 2026 tax year depending on when new construction on the property commences or the date ‘inhabitability’ of a property occurs.
  • Land that becomes residential land during a calendar year is not subject to VRLT in the following year.
  • Provided a property changed ownership within a specified period in a calendar year, it may also qualify for an exemption.
  • Some properties may also qualify for an exemption if they meet specific ‘holiday home’ requirements, namely being occupied for at least 4 weeks in a calendar year by the owner and other qualified individuals.
  • And lastly, an exemption is available for properties which meet the ‘work accommodation’ requirements.

It is worth noting that from 1 January 2026, ‘unimproved residential land’ that has remained undeveloped for 5 years or more may also attract VRLT.

The definition of ‘vacant’, ownership changes and the application of certain time frames can be complex and you can only obtain an exemption by notifying the State Revenue Office by certain due dates. For the use of property in the 2024 calendar year notification must be submitted by 15 January 2025.

We welcome you to a chat with our expert tax advisors if you have any questions or concerns regarding your property investments and responsibilities.

Contributed by Helene Kosasie.

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