Do you own a property in Victoria that’s been sitting vacant? You may be liable for the vacant residential land tax (VRLT). 

In this article, we’ll answer your most commonly asked questions about the VRLT, including what it is, why it’s charged, and the consequences of non-payment. 

When and why was the VRLT introduced? 

The VRLT came into effect on 1 January 2018 and applies to residential properties vacant for 6 months or more within a calendar year. It was introduced to address housing affordability concerns and encourage property owners to make their vacant properties available for rent or purchase.  

Initially, the tax only applied to properties in Melbourne’s inner and middle suburbs, but with housing concerns rising across the country, the VRLT will cover all residential properties in Victoria from 1 January 2025

What’s the definition of a ‘vacant’ property? 

A property is considered vacant if it hasn’t been lived in for at least 6 months in the previous calendar year by: 

  • the owner 
  • a permitted occupant 
  • a person under a lease or rental agreement.  

Importantly, the 6-month period doesn’t need to be continuous.  

Who is liable for VRLT, and when is it due?  

The property owner is responsible for paying the VRLT to the State Revenue Office (SRO). If you’re liable for VRLT, you’ll receive an assessment notice early in the year for the preceding year, which you’ll have 60 days to pay.  

Are there any exemptions to the VRLT?  

Yes, some properties may be exempt from the VRLT (depending on specific requirements), including: 

  • Properties under construction (exempt for up to 2 years, with possible extensions for reasonable delays) 
  • Holiday homes that meet specific criteria 
  • Display homes 
  • Homes used for residential care and retirement villages  
  • Properties owned by the armed forces, not-for-profits or government entities 
  • Uninhabitable residences (homes that are unsafe to live in).  

The SRO website has more detailed information on VRLT exemptions.  

What’s the VRLT tax rate, and how is it calculated? 

For the period 2018-2024, the VRLT is 1% of the property’s capital improved value (CIV). For example, if the property has a CIV of $600,000, the tax payable is $6,000.  

From 2025 onward, the VRLT rate will increase by 1% each year the property remains vacant. This means the VRLT will be 1% in the first year the property has been vacant for 6 months or more, 2% in the second consecutive year, and 3% of the CIV for subsequent years. 

How to calculate your VRLT liability 

You can calculate your VRLT liability using the SRO’s vacant residential land tax calculator

I own a vacant property in Victoria. What do I need to do?  

If you own a property that’s been vacant for 6 months or more during the 2024 calendar year and don’t believe you meet the exemption requirements, you’ll likely be liable for VRLT.  

You must notify the SRO of vacant residential land by 15 January each year via their online portal, even if you believe you’re exempt.    

What happens if I don’t notify the SRO about my vacant property? 

If you miss the yearly 15 January deadline, you must notify the SRO via the online portal as soon as possible.  

Failure to notify is considered a default under the Taxation Administration Act 1997, and you may be subject to penalty tax on the amount assessed by the SRO. The penalties can range from 5% to 90%, depending on the circumstances:  

  • 5% if you voluntarily tell the SRO about your vacant residential properties before they start an investigation 
  • 20% if you tell the SRO about your vacant residential properties after they start an investigation 
  • Up to 90% if the SRO believes you intentionally disregarded the law and hindered their investigation. 

Need help navigating property taxes? 

Chat with our experienced accounting team 

If you have any questions or concerns about the VRLT or other property tax matters, our knowledgeable accountants are here to assist you.  

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This article was written by Tax and Business Services Manager Michael Rebula.  

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.