The Victorian Government announced that from 1 January 2025, the Vacant Residential Land Tax (VRLT) will apply to residential land across all of Victoria. This tax will be levied if the land remains vacant during the preceding calendar year.

Previously, VRLT only applied to residential land that was vacant for more than six months in a calendar year located in specific Council areas.

The new VRLT is imposed each year on taxable land in Victoria that is vacant residential land. Residential land is land that is capable of being used solely or primarily for residential purposes.

Residential land does not include commercial residential premises, residential aged care facilities or a retirement village service.

How much is VRLT?

The State Revenue Office Victoria website states that VRLT is calculated on the capital improved value of taxable land.

A progressive rate of VRLT applies to non-exempt vacant residential land across all of Victoria.

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.

Exemptions from VRLT

Exempt residential land includes alpine resorts, holiday homes, and land occupied for purposes of attending a place of business or employment.

For example, a holiday home is exempt from VRLT in the year 2024 if:

 – the landowner of the holiday home used and occupied other land in Australia as a principal place of residence, and

 – the landowner or a relative of the landowner used and occupied the land as a holiday home for a period of four weeks (whether continuous or aggregate).

If you are a landowner who has a property actively marketed for sale, if the property changes ownership during the year preceding the tax year, it is not subject to VRLT for that tax year. This means that if a property is sold during 2025 (it must settle on or before 31 December 2025), this is exempt from VRLT in the following tax year.

Owner of land subject to VRLT must notify Commissioner

If you are a landowner and you own certain residential land that was vacant in 2024:

 – for more than six months in 2024;

 – 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;

You must lodge a written notice to the Commissioner via the SRO online portal.

 You must notify the Commissioner even if you believe you are entitled to an exemption. You can claim an exemption when you make the notification via the SRO online portal.

 If you have any questions or require legal advice about this topic, please contact our Associate, Ita Wong at ita.wong@lewisholdway.com.au or telephone the office on (03) 9629 9629.