VRLT is separate from ordinary land tax, the absentee owner surcharge and the federal vacancy fee for foreign owners. It is assessed by reference to how the property was used in the preceding calendar year. A dwelling may be treated as vacant if it was unoccupied for more than six months, although the legislation contains exemptions and special rules for particular circumstances.
The tax now applies across Victoria to residential land that meets the statutory criteria. From 1 January 2026, the regime also covers certain undeveloped residential land in metropolitan Melbourne that has remained undeveloped for five continuous years and is capable of residential development. The five-year period may include time before 2026. Land that cannot lawfully or practically be developed for residential use may be excluded, and other exemptions can apply.
The rate depends on the circumstances and the number of consecutive years the land has been liable. For many properties the progressive rates are 1% of capital improved value for the first year, 2% for the second year and 3% for the third and later years. Certain undeveloped land and new residential land have separate rate rules. Owners may have to notify the State Revenue Office even where they believe an exemption applies.
CMK Legal's property and conveyancing team can act on matters like this.
Check the property use for the whole preceding calendar year, the applicable exemption and the current rate. Do not assume that an empty property is automatically exempt because it is being renovated, held as a holiday home or recently acquired.
Law referenced: *Land Tax Act 2005* (Vic). Current official guidance: https://sro.vic.gov.au/owning-property/vacant-residential-land-tax/understanding-vacant-residential-land-tax