Victorian Vacant Residential Land Tax Now in Effect
- Future Accounting
- Jun 16
- 3 min read
Updated: Aug 13
What Property Owners Need to Know for 2025 and Beyond
Effective January 1, 2025, the Vacant Residential Land Tax will apply throughout all of Victoria, not just Metropolitan Melbourne.
If you own multiple residential properties, you may have already received a notification from the State Revenue Office (SRO). Property owners are now required to report any properties - excluding their main place of residence - that remained vacant for more than six months during the 2024 calendar year.
What Is the Vacant Residential Land Tax?
This is a tax that applies in addition to standard Land Tax and targets under-used residential properties in an effort to increase housing availability.
This tax is in addition to your regular Land Tax obligations.
What Properties Will Be Affected?
The Vacant Residential Land Tax applies to any residential property that fits these criteria:
Properties where the home has been vacant for more than six months in the previous calendar year.
Properties where a home has been under construction or renovation for two years or longer.
Properties with a home that has remained uninhabitable for at least two years.
Important: If the property is owned via a trust or company, the Vacant Residential Land Tax rules are even more complex.
What Residential Properties Are Not Affected?
The tax does not apply to:
Vacant land without a home
Commercial residential premises (e.g. hotels, motels)
Residential care facilities and supported residential services
Retirement villages
Properties located in alpine resorts
Are There Any Exemptions?
Yes, there are a few key exemptions from Vacant Residential Land Tax:
Principal place of residence – Your main home is exempt.
Primary production land – Properties used for farming may qualify for an exemption if it is not used for residential purposes
Holiday home exemption – One holiday home may be exempt, provided you (or a family member/beneficiary) use and occupy it for at least 4 weeks in a calendar year.
Work accommodation exemption – If the property is used and occupied by the owner for work purposes and meets the eligibility criteria.
How is the tax calculated?
The Vacant Residential Land Tax is calculated on the capital improved value (CIV) of your property - that’s the number shown on your council rates notice. The rate increases each year the property stays vacant:
Year 1: 1% of the capital improved value
Year 2: 2% of the capital improved value
Year 3: 3% of the capital improved value
In other words, the longer the property remains unoccupied, the higher the tax rate applied.
For example, if a property has a Capital improved value of $2 million and remains vacant without exemption:
In the first year, the Vacant Residential Land Tax payable is $20,000
In the second year, it increases to $40,000
In the third year, it climbs to $60,000
Action Required If you own a property that was vacant during 2024, or for the six months up to 30th June 2025, and does not meet exemption criteria, you are required to notify the SRO that you may be taxable.
We are here to help...
If you're unsure whether your property is subject to Vacant Residential Land Tax - or you're navigating exemptions and ownership structures - Future Accounting can review your situation, assist with State Revenue Office reporting, and help you manage (and minimise) any upcoming obligations.
Please feel free to get in touch.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
