Vacant residential land tax (VRLT) – Self-Assessed Lodgements Due 15 Jan 2025

Vacant residential land tax (VRLT) January 2025 deadline

Owners of residential land in Victoria should now review their landholdings and ensure that they take the necessary actions to apply for an exemption or declare their vacant properties to the State Revenue Office (SRO).

Key Points

• VRLT in Victoria will be expanding to cover all residential land state-wide from 1 January 2025.
• Owners of residential land across Victoria are required to self-report (via the SRO Online Portal) by 15 January if their property has been vacant for more than 6 months during the preceding calendar year.
• If a property is eligible for an exemption, the owner must apply for that exemption by self-reporting to the SRO.
• Failing to notify the SRO that your property is vacant or exempt may result in a VRLT assessment, penalty tax (ranging from 5% under voluntary disclosure up to 90% for intentional non-compliance) and interest charges applied to overdue tax.

On 1 January 2025, the Victorian Government’s Vacant Residential Land Tax is expanding to cover all residential land in Victoria.  This affects anyone who owns such land and particularly impacts people with more than one residential property in Victoria (e.g. a holiday home).

All Victorian landowners must self-assess if they are affected and lodge appropriate declarations, and any claims for exemptions, with the State Revenue Office by latest 15 January 2025.  This can be done via the SRO’s online portal.

We are able to assist both with determining whether you are impacted and attending to lodgement of any declarations and exemptions with the SRO.  

Please reach out prior to the above due date if you would like our assistance with VRLT.

What you need to know

VRLT may apply to:

• residential land with an existing home on it that is vacant for more than 6 months in the calendar year preceding the tax year
• 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.

VRLT for any year is assessed on the previous year’s occupation of the property. For example, VRLT in 2024 is based on a property’s vacancy in 2023.

VRLT does not apply to land without a home on it (sometimes called unimproved land), commercial residential premises, residential care facilities, supported residential services, retirement villages or land in alpine resorts.

From 1 January 2025, VRLT will apply to residential land anywhere in Victoria if the land is vacant in the preceding calendar year. This means that if you own residential land anywhere in Victoria that is vacant in 2024, you may be liable for VRLT in 2025.

VRLT will not apply to any residential land in the alpine resorts of Mt Baw Baw, Mt Buller, Mt Hotham, Mt Stirling, Falls Creek and Lake Mountain. VRLT also does not apply to properties that receive the Primary Production land tax exemption or properties under a long-term lease.

Residential land outside of inner and middle Melbourne (i.e. outer Melbourne and regional Victoria) with a residence that was under construction or renovation or was uninhabitable as at 31 December 2023 will not be regarded as vacant until 31 December 2025. This means it may only be liable for VRLT from the 2026 tax year.

VRLT is calculated on the capital improved value (CIV) of taxable land. This is the value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process. It is displayed on the council rates notice for the property. The rate of VRLT is currently 1% and will increase to 2% and then 3% if the property remains vacant for 2 or 3+ years.

What does 'vacant' mean?

Residential land is considered vacant if, for more than 6 months in the preceding calendar year, it has not been lived in by:

• the owner, or the owner’s permitted occupant, as their principal place of residence (PPR), or
• a person under a lease or short-term letting arrangement made in good faith.

The occupation does not need to be by the same occupant or for a single continuous period, and a beneficiary of a discretionary trust can be a permitted occupant.

It is not enough that the property is available for occupation, such as by listing on a short-term rental website. It must have been actually used and occupied for more than 6 months.

It is also not enough for the property to be used intermittently or on a casual basis by friends or family of the owner. The use and occupation must be either as a PPR or subject to a bona fide lease or letting arrangement.

Residential land is also considered vacant if, at the end of the calendar year preceding the tax year:

• the land has a residence that has been under construction or renovation for more than 2 years since the building permit was issued, and that work is not complete
• the land has a residence that has been uninhabitable for 2 years or more.

Rates of VRLT

From 1 January 2025, a progressive rate of VRLT applies to non-exempt vacant residential land across all of Victoria. VRLT is calculated on the capital improved value (CIV) of taxable land. This is the value of the land, buildings and any other capital improvements made to the property as determined by the general valuation process. It is displayed on the council rates notice for the property.

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

Homes that are exempt from land tax are also exempt from vacant residential land tax.  This includes a home that is exempt from land tax as a principal place of residence.

Properties that change ownership during a calendar year are exempt from VRLT in the following year.   The change of ownership must occur during the calendar year. It is not enough that the property is available for sale or awaiting settlement as at 31 December of the year preceding the tax year.

Land that becomes residential land during a calendar year is not subject to VRLT in the following year.

An exemption applies to a property used and occupied by the owner or a vested beneficiary of the trust to which the land is subject as their holiday home for at least 4 weeks (whether continuous or aggregate) in a calendar year.  To qualify for this exemption, the owner or vested beneficiary must also have a principal place of residence (home) in Australia in addition to their holiday home, but they do not have to own that home. The Commissioner of State Revenue must also be satisfied that the property was a genuine holiday home, having regard to its location and distance between the owner or vested beneficiary’s actual home and the holiday home, as well as the frequency and nature of its use. Please also note an owner or a vested beneficiary will only be able to claim one holiday home exemption in a given calendar year.

There are a number of exemptions potentially available, though the exemptions above are likely to be the most relevant for the majority of landowners. Please reach out to us if you wish to discuss your specific circumstances or require assistance with making declarations to the SRO.