What is it?

Vacant Residential Land Tax (VRLT) is a tax levied against residential land in Victoria that is vacant. It is imposed in addition to any other land tax that may be imposed on land in Victoria.

VRLT was introduced by the Victorian Government and commenced in 2018 with the intent of addressing a shortage of available housing in Victoria. VRLT initially only applied to land in inner and middle Melbourne, before being expanded to the rest of Victoria in January 2025.

VRLT is governed by Part 2 Division 6 of the Land Tax Act 2005 (Vic)(Act).

When does it apply?

Under the Act, residential land is taken to be vacant if it has not been used and occupied by either the owner, a tenant under a lease, or any other person permitted by the owner to occupy the land for a period of 6 months or more in the year preceding the tax year. VRLT also applies to land on which construction of a home has not yet been completed and 2 years from the date construction commenced have passed. For these purposes, “construction” generally commences when the relevant building permit is issued.

VRLT does not apply to commercial residential premises or land in the alpine resorts.

An owner of vacant residential land is required to notify the Victorian State Revenue Office if any land they own has been vacant for 6 months or more in the preceding calendar year.

This notification must be given before 15 February each year. If a landowner fails to notify the Victorian State Revenue Office of vacant residential land by this date, they may incur penalty tax.

Exemptions

There are several exemptions to the VRLT, which are set out in the Act.  VRLT does not apply to land that is zoned for non-residential use. If land is exempt from Land Tax, then it is also exempt from VRLT.

How much is the tax?

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 Capital Improved Value (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; and
• 3% of the CIV of the land where the land is liable for VRLT for a third consecutive year, and each subsequent year.

Changes from 1 January 2026

From 1 January 2026, VRLT was expanded to include land in metropolitan Melbourne that has remained vacant for a period of 5 years or more and is capable of residential development.

This means that VRLT will now apply to undeveloped land in metropolitan Melbourne which does not have a home on it, land that has a partially built residence which has since been abandoned, and land that has a residential unit that has a partially completed fit out but has not been occupied. Limited exceptions will apply.

Do you require advice?

The Property Law Team at Kell Moore Lawyers are highly experienced in advising on all stages of property ownership in Victoria. If you own, or are intending to own land which may be vacant, please contact the property team at Kell Moore Lawyers.

This article is for general information only and does not constitute legal advice. You should not rely on this information without seeking professional legal advice.