The Victorian Government has recently updated their Vacant Residential Land Tax (VRLT) legislation to now include undeveloped land in Metropolitan Melbourne.
With new Treasurer’s Guidelines issued in November 2025, property owners with stalled or delayed construction projects should review whether they qualify for discretion under the updated rules.
These changes make it essential to review how your property is used throughout the year and take steps now to ensure you understand your obligations and potential exemptions.
Who is affected?
Owners of properties that have been vacant for more than six months in any given calendar year. Previously, this only applied to properties in inner Melbourne suburbs. However, on 1 January 2025 this was extended to all Victorian properties.
Further, from 1 January 2026, VRLT is extending to land in metropolitan Melbourne that has remained undeveloped for a continuous period of five years or more and is capable of residential development.
If you own residential land that was vacant in 2025, you must also notify the SRO by 15 February 2026.
What do I need to do if I own vacant property?
You are required to lodge a vacant residential land tax (VRLT) notification with the State Revenue Office (SRO). The due date for lodgement is the 15th of January 2026 and is done through the SRO’s online system (see links below).
Are holiday homes caught?
In short, yes.
However, holiday homes that have been occupied by the owner for at least four weeks in the year may be eligible for an exemption from this additional tax. Owners can apply for this exemption together with their vacant residential land tax notification online.
If I have vacant property, and I do not qualify for any exemptions, how much is this additional tax?
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 Capital Improved Value (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.
Land tax is complex. Please contact your HMH advisor to clarify how these rules will apply to your personal situation.
SRO Links
https://www.sro.vic.gov.au/vacant-residential-land-tax
https://www.sro.vic.gov.au/vacant-residential-land-tax/frequently-asked-questions