Local property investors run the risk of being hit with a massive additional state tax if they fail to comply with the Vacant Residential Land Tax (VRLT) requirements.

From 1 January 2025, VRLT will apply to residential land across all of Victoria if the land is vacant for more than 6 months in the preceding calendar year. Prior to 1 January 2025, it applied only to vacant residential land in inner and middle Melbourne.

VRLT may apply to residential land that is vacant for more than six months in the preceding calendar year. Failure to comply with this VRLT requirement could see an owner of an “average” Daylesford house (median price $890,000) hit with an additional tax burden of $8900 in 2025. This will rise to $26,700 in 2027 if it remains non-compliant.

Properties most at risk include short term rental properties and houses that are not occupied for at least 6 months of the calendar year. Residential land does not include land without a home on it (sometimes called unimproved land),

This means that if you own residential land in Victoria that is vacant for more than 6 months in 2024, you may be liable for VRLT in 2025.

How much is VRLT?

From 1 January 2025, a progressive rate of VRLT will apply to non-exempt vacant residential land across all of Victoria. VRLT is calculated on the capital improved value (CIV) of taxable land. The CIV of a property is the value of the land, buildings and any other capital improvements made to the property as determined by the Valuer-General of Victoria. It is displayed on the council rates notice for the property. The calculation differs from land tax assessments which are based on the land value only.

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.

Victoria is the only state to have introduced a VRLT.  The VRLT is in addition to recent increases in land tax (for all investment properties) which included the 10 year COVID Debt Repayment Plan surcharge.

Short Term Rentals

If a property is leased through any online platform, such as Airbnb or Stayz, it is subject to VRLT if it is unoccupied for more than six months in a calendar year. The six months does not need to be continuous.

Owners need to be able to verify that the property has been occupied for more than 182 days in the calendar year. Having a property listed as available does NOT meet these criteria. The property must have guests staying.

The owner must notify the State Revenue Office through the VRLT portal by 15 January in the following year if the property was vacant for more than six months. Failure to notify the SRO  may result in an assessment being issued with penalty.

Holiday Homes

Someone who owns a holiday home may qualify for an exemption if they have a principal place of residence in Australia and occupy the holiday home for at least 4 weeks (continuous or aggregate). The exemption only applies to one holiday home and is subject to restrictions based on location and the distance from the principal residence..


It is recommended that owners of investment properties obtain their own professional advice about the status of any property  and be aware that the assessment is based on the 2024 calendar year.