Currently, Victoria’s Vacant Residential Land Tax (VRLT) will apply state‑wide to all vacant residential land. This expansion represents a significant shift in the compliance landscape, capturing many more property owners, including those with holiday homes, investment properties, and unused residential dwellings. Our expert tax consultants unpack the changes...
VRLT is an annual tax, assessed based on whether a property has been vacant for more than six months in the preceding calendar year. As a result, many owners will now need to understand their obligations and exemptions to avoid unexpected assessments and penalties.
What Counts as Vacant Residential Land?
A residential property is considered ‘vacant’ if, for more than six months in the previous year, it was not:
- occupied by the owner as their principal place of residence (PPR); or
- occupied by a permitted occupant; or
- genuinely leased under a good‑faith tenancy or short‑term letting arrangement.
Importantly:
- The six‑month occupation does not need to be continuous.
- Multiple short periods of genuine use may be aggregated to meet the requirement.
In addition to vacancy, a property may also be subject to VRLT if:
- It has been under construction or renovation for more than two years, or
- It has been uninhabitable for more than two years; or
- Land in metropolitan Melbourne has remained undeveloped for a continuous period of 5 years or more and is capable of residential development.
Key Holiday Home Land Tax Exemption Rules
A holiday home may qualify for an exemption from VRLT, provided strict criteria are met:
Minimum Usage Requirement
The property must be used as a holiday home for at least 4 weeks (28 days) in the calendar year. The 28 days may be accumulated through usage by:
- the owner, or
- close relatives (e.g., spouse, children, parents)
Principal Place of Residence Requirement
To claim the exemption, the owner must hold a principal place of residence in Australia.
Ownership Structure Matters
The exemption is generally not available where a holiday home is owned via a trust or company as individuals are the primary beneficiaries of the exemption.
Evidence and Record‑Keeping
As the State Revenue Office (SRO) evaluates actual use, property owners should maintain:
- usage logs or diaries
- dates of occupation
- records of who used the property and when
These documents assist in substantiating eligibility for the exemption.
Victorian Residential Land Tax Rates
VRLT is calculated as a percentage of the property’s Capital Improved Value (CIV):
- 1% - first year the property becomes liable
- 2% - second consecutive year
- 3% - third and subsequent consecutive years
These rates apply annually until the property is no longer considered vacant or an exemption applies.
VRLT Self‑Notification Deadline: 15 February 2026
Property owners must self‑report to the SRO if:
- their residential land was vacant during 2025, or
- they wish to apply for a relevant exemption (including holiday home exemptions)
For the 2025 year, the deadline to lodge the notification or exemption application is 15 February 2026.
Failure to notify may result in:
- a VRLT assessment
- penalty tax
- interest charges
How Our Tax Consultants Can Help
As the VRLT regime expands statewide, more property owners will be impacted, often unintentionally. BlueRock can assist with:
- assessing whether VRLT applies to your property
- determining exemption eligibility
- preparing and lodging SRO notifications
- reviewing ownership structures and potential planning opportunities
If you hold residential land in Victoria, especially a holiday home, investment property, or vacant dwelling, now is the time to review your position! Submit the form below and we'll be in touch.
