Vacant land tax Victoria, officially called vacant residential land tax (VRLT), is an annual State Revenue Office (SRO) tax on residential property that sat empty for more than 6 months of the previous calendar year. It now applies across the whole state, and from 2026 it also reaches some undeveloped land in metropolitan Melbourne.
The tax is worked out on the property’s capital improved value, not the price you paid, and there is no tax-free threshold. The rate starts at 1% and climbs to 2% and then 3% if the same property stays vacant year after year.
Below we cover who has to pay, the 2026 rates, the exemptions, a worked example with every number shown, and how to notify the SRO by 15 February.
Key takeaways
- VRLT applies to residential land anywhere in Victoria that was vacant for more than 6 months in the previous year.
- Rates are 1%, 2% then 3% of capital improved value for consecutive years of liability, with no threshold.
- From 1 January 2026, undeveloped metropolitan Melbourne land left undeveloped for 5 years or more can be taxed at 1%.
- You must notify the SRO by 15 February, even if you think an exemption applies.
- Common exemptions include your main residence, holiday homes used for 4 weeks a year, work accommodation used for 140 days, and recent changes of ownership.
Vacant land tax Victoria at a glance
| Question | Short answer |
|---|---|
| Who runs it? | State Revenue Office Victoria |
| Where does it apply? | All residential land in Victoria (since 2025) |
| When is a home vacant? | Not lived in for 6 months or more of the previous calendar year |
| What is it based on? | Capital improved value, with no threshold |
| Rate | 1% first year, 2% second consecutive year, 3% third year onwards |
| Flat 1% categories | Undeveloped metro Melbourne land (5+ years), new homes unsold for more than 3 years |
| Notification deadline | 15 February each year |
| Assessment issued | Before 30 June |
Who has to pay vacant residential land tax?
According to the SRO guide to vacant residential land tax, you may need to pay VRLT if you own any of the following on 31 December:
- A home that was vacant for more than 6 months in the previous calendar year.
- A home that has been under construction or renovation, or uninhabitable, for 2 years or more.
- From 1 January 2026, land in metropolitan Melbourne that has stayed undeveloped for a continuous period of 5 years or more and is capable of residential development. That 5-year period can include years before 2026.
Before 2025, VRLT only applied in 16 council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Merri-bek, Port Phillip, Stonnington, Whitehorse and Yarra. It now covers all residential land in Victoria.
VRLT is a separate tax from ordinary land tax and from the absentee owner surcharge. For how ordinary land tax works, see our guide to land tax rates in Victoria and the land tax thresholds across Australia.
What counts as vacant?
A home is vacant if it was not lived in for 6 months of the previous year by the owner or their permitted occupant as their home, or by someone under a genuine lease or short-term letting arrangement. The 6 months do not have to be continuous or by the same person.
Watch out
- A home that is only listed for rent, sale or short stays still counts as vacant. It has to actually be lived in for 6 months or more.
- Properties used by family and friends now and then are caught unless the holiday home exemption applies.
- Individually bought serviced apartments and short-stay properties are caught unless they are used for more than 6 months of the year.
Which land is undeveloped land from 2026?
From 1 January 2026, VRLT also applies to land in metropolitan Melbourne that is not in a non-residential zone, is capable of residential development and has stayed undeveloped for 5 years or more. That includes bare blocks and homes that are partly built but have never been lived in. Metropolitan Melbourne covers 31 council areas for this rule, including Casey, Cardinia, Hume, Melton, Whittlesea and Wyndham.
What are the vacant land tax rates for 2026?
The SRO current VRLT rates are set out below. There is no threshold and no COVID levy.
| Situation | Rate of capital improved value |
|---|---|
| First year the land is liable | 1% |
| Second consecutive year liable | 2% |
| Third or later consecutive year liable | 3% |
| Undeveloped metro Melbourne land (5+ years, capable of residential development) | 1% |
| New residential land unused, unoccupied and unsold for more than 3 years | 1% |
Before 2025, VRLT was a flat 1% of capital improved value for every property. Capital improved value is the value of the land plus buildings and other improvements, set by the Valuer-General, and it is shown on your assessment.
How much would you pay? A worked example
This example shows how the old flat rate compares with the new escalating rates for a home outside the original 16 council areas.
The facts
- Priya owns a house in Geelong with a capital improved value of $800,000.
- It was rented to tenants until the end of 2024, so it was never liable for VRLT before.
- It then sits empty for all of 2025, 2026 and 2027, and no exemption applies.
- For simplicity, the capital improved value stays at $800,000 each year.
Old rules (before 2025)
Before 2025, VRLT only applied in 16 inner and middle Melbourne council areas. Geelong was not one of them, so under the old rules Priya would have paid $0. Even inside those 16 councils, the rate was a flat 1%, which would have been $800,000 × 1% = $8,000 a year.
New rules (2025 onwards)
VRLT now applies across Victoria and the rate rises each consecutive year the property is liable. Each assessment is based on the previous calendar year.
| Assessment year | Vacant year | Rate | Calculation | Tax |
|---|---|---|---|---|
| 2026 | 2025 | 1% | $800,000 × 1% | $8,000 |
| 2027 | 2026 | 2% | $800,000 × 2% | $16,000 |
| 2028 | 2027 | 3% | $800,000 × 3% | $24,000 |
| Total | $8,000 + $16,000 + $24,000 | $48,000 |
Three years of vacancy would cost Priya $48,000 in VRLT under the new rules, compared with nothing under the old rules. If the house were let to a tenant for at least 6 months of any of those years, that year would not be vacant and the rate sequence would need to be rechecked.
Now compare an undeveloped block. Sam has owned a vacant residential block in Wyndham since 2019, with a capital improved value of $450,000, and it is capable of residential development. Under the old rules nothing was payable. From 2026, undeveloped metropolitan Melbourne land is taxed at a flat 1%: $450,000 × 1% = $4,500 a year, without stepping up to 2% or 3%.
These figures are illustrations only. Use the valuation on your own assessment, or try our land tax calculator to model your ordinary land tax as well.
Which exemptions can you claim?
If land is exempt from land tax, including your principal place of residence, it is also exempt from VRLT. The SRO exemptions page lists these specific VRLT exemptions:
| Exemption | Main test |
|---|---|
| Holiday home | You or your relatives use it for at least 4 weeks in the calendar year, and your own home is in Australia. One holiday home per year. |
| Work accommodation | You use it for at least 140 days in the year to attend your workplace in Victoria, and your home is in Australia. Not available to companies. |
| Change of ownership | Ownership actually changed during the year. Being listed for sale or awaiting settlement is not enough. |
| Land recently became residential | Exempt the following year. Up to 2 years if not used, occupied or sold, and up to 3 years from 2025 if you also made genuine efforts to sell. |
| Renovation started and finished in the year | From 2026, significant works that stopped the home being lived in started and finished in the previous calendar year. |
| Land incapable of residential development | From 2026, undeveloped land that physically or legally cannot be used for housing. |
| Land next to your home or holiday home | From 2026, undeveloped adjoining land used only for the enjoyment of the home, such as a garden or tennis court. |
VRLT also does not apply to commercial residential premises, residential care facilities, supported residential services, retirement villages, display homes, or land in alpine resorts and Dinner Plain.
How do you notify the SRO by 15 February?
If you own vacant residential land, the SRO notification page says you must notify by 15 February through the SRO portal. For a home that was vacant during 2026, that means by 15 February 2027. Missing the deadline may lead to penalty tax.
- Check each property against the vacancy, construction and undeveloped land tests for the previous calendar year.
- Gather your SRO customer number and an assessment number, municipal property number or previous notification reference.
- Lodge the notification in the SRO portal. Joint owners notify once per ownership structure.
- Apply for any exemption in the same portal at the same time.
- Check your assessment when it arrives and correct any errors within 60 days.
Tip
- You must notify even if you believe the property is exempt. Once an exemption is granted, you do not need to re-apply each year unless your circumstances change.
- Keep records proving your exemption for 5 years, such as leases, a holiday home use diary, payslips or rosters, and building permits.
What happens after you notify?
If you owe VRLT, the SRO will send an assessment before 30 June showing each vacant property, its capital improved value, the rate and any exemptions. The SRO assessment guide says you must report any errors through the portal within 60 days, and you have 2 months to lodge an objection if you disagree with the valuation. You can pay in full or by instalments.
How can you reduce your vacant land tax exposure?
- Lease it out. A genuine tenancy covering 6 months or more of the year stops the home being vacant for that year.
- Live in it or use it as a holiday home. Your main residence is exempt, and a holiday home can be exempt with 4 weeks of genuine use.
- Sell it. A change of ownership exempts the property for the following year, but check the capital gains tax first. See our guides to capital gains tax on property and CGT on rental property.
- Inherited a vacant home? Weigh VRLT against the CGT timing rules in our inherited property CGT guide.
- Plan works carefully. From 2026, renovations that start and finish within one calendar year can be exempt, while works running 2 years or more can trigger the tax.
Investors with several properties should also review their wider investment property accounting, because each title and owner is assessed on its own facts.
Vacant land tax Victoria FAQs
Does vacant land tax Victoria apply outside Melbourne?
Yes. Since 1 January 2025, vacant residential land tax applies to residential land across all of Victoria. Before 2025 it only applied in 16 inner and middle Melbourne council areas. The newer rule for undeveloped land is narrower and only covers metropolitan Melbourne.
How much is vacant residential land tax in 2026?
It is a percentage of the property’s capital improved value, with no tax-free threshold. The rate is 1% for the first year the land is liable, 2% for the second consecutive year and 3% for the third or later consecutive year. Undeveloped metropolitan Melbourne land and new homes unsold for more than 3 years stay at 1%.
When do I need to notify the SRO?
By 15 February each year, for land that was vacant in the previous calendar year. For a home that sat empty during 2026, the notification is due by 15 February 2027. You must notify even if you think an exemption applies.
Does listing my property for rent stop the tax?
No. The SRO says it is not enough for a property to be available or listed for rent, sale or short stays. Someone must actually live in it for at least 6 months of the year, as a home or under a genuine lease or short-term letting arrangement.
Is my holiday home exempt?
It can be. You or your relatives need to use it for at least 4 weeks in the calendar year, your own home must be in Australia, and you can only claim one holiday home exemption per year. A use diary helps support the claim.
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Talk to a registered tax agent
Not sure whether one of your Victorian properties is caught, or which exemption fits? Speak with a registered tax agent at Nanak Accountants & Associates on 1300 626 258, or book a consultation with our team. We help investors with property tax and accounting across Australia.
This article is general information only and is not personal financial or tax advice. Information checked against State Revenue Office Victoria sources on 29 October 2026.
