Insights Library
Update: Vacant Residential Land Tax Changes
From 1 January 2026, Vacant Residential Land Tax (VRLT) is changing.
Before 1 January 2026, VRLT does not apply to undeveloped land, commercial residential properties, care facilities, retirement villages, or land in alpine resorts. Please see our previous article relating to VRLT here.
From 1 January 2026, VRLT will apply to undeveloped land in metropolitan Melbourne that has been unused for 5+ years and is suitable for residential development, including abandoned builds and unoccupied partially finished units. This includes:
- land without a home
- land with an abandoned, partially built home
- land with an unoccupied, partially fitted-out apartment or unit
Metropolitan Melbourne is made up of 31 council areas including Banyule, Bayside, Boroondara, Brimbank, Cardinia, Casey, Greater Dandenong, Darebin, Frankston, Glen Eira, Hobsons Bay, Hume, Kingston, Knox, Manningham, Maribyrnong, Maroondah, Melbourne, Melton, Merri-bek, Monash, Moonee Valley, Mornington Peninsula, Nillumbik, Port Phillip, Stonnington, Whitehorse, Whittlesea, Wyndham, Yarra and Yarra Ranges.
The residential status of land will depend on the zoning for each property under the relevant local planning scheme. The land must be vacant for a continuous period of 5 years or more to attract VRLT. To become liable for VRLT in 2026, the land must have been undeveloped and capable of residential development since 31 December 2020. The Commissioner may extend the 5 year period in accordance with guidelines published by the Treasurer. These are not yet available.
Exclusions include land currently used or under development for non-residential use (e.g. commercial or industrial use); and land that is intended to be solely or primarily used or developed for a non-residential use and there is an acceptable reason for the land not yet being used or developed.
Exemptions may be available for:
- Undeveloped land that cannot be used for residential purposes due to factors like size, shape, natural features, or environmental conditions—where development is practically impossible, not just uneconomical or inconvenient.
- Undeveloped residential land adjoining a principal place of residence, such as land used for a garden, pool, or tennis court.
VRLT for undeveloped residential land in metropolitan Melbourne, the rate 1% of the CIV of the land per year. From 1 January 2025, progressive rates of VRLT apply to non-exempt vacant residential land across all of Victoria. More details on rates can be found on the SRO website.
You must notify SRO by 15 January 2026, if you have owned land in metropolitan Melbourne that has remained undeveloped for a continuous period of 5 years or more as at 31 December 2025 and is capable of residential development.
Our Property Law team are available to help you navigate the notification requirements and the application of any exemption.
Please reach out to discuss any aspect if it may be relevant to your circumstances.
