Victoria's Vacant Residential Land Tax (VRLT) expanded to apply across all of Victoria from 1 January 2025, with escalating rates for properties vacant in consecutive years and a separate levy on undeveloped residential land in metropolitan Melbourne from 1 January 2026. A buyer who purchases a previously vacant property can inherit a substantial unpaid liability — or trigger an ongoing one — if the conveyancer does not run the right pre-settlement checks. The two non-negotiables are a current land tax clearance certificate and a clear settlement-adjustment treatment of any current-year liability. This guide walks through the checks for VIC and contrasts the position in NSW and other states.
Victoria's VRLT — what changed in 2024-2026
VRLT was originally introduced in 2018 and applied only to residential property in 16 inner and middle Melbourne council areas. It is levied under the Land Tax Act 2005 (Vic) and administered by the State Revenue Office of Victoria.
The State Taxation Acts Amendment Act 2024 (Vic) made three material changes:
- Geographic expansion to all of Victoria from 1 January 2025. VRLT applies to residential land anywhere in Victoria that has been vacant for more than 6 months in the preceding calendar year, not just inner and middle Melbourne. - Escalating rates for consecutive years of vacancy. The rate increases progressively for properties vacant in second and third consecutive years, with the highest rate applying to land that has been vacant for three or more consecutive years. Current rates and brackets are published on the SRO Victoria page — verify before advising. - New levy on undeveloped residential land in metropolitan Melbourne from 1 January 2026. Residential land in metropolitan Melbourne that has been undeveloped for 5 or more consecutive years is now caught, with policy intent to deter long-term land banking.
VRLT operates alongside, not instead of, ordinary land tax. Ordinary land tax under Part 2 of the Land Tax Act 2005 (Vic) applies on the unimproved value of land above the threshold; absentee owner surcharge under Part 5 applies on top of that for absentee owners. VRLT under Part 6 is a further layer specifically targeting vacancy.
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What counts as "vacant" — and the main exemptions
For VRLT purposes, residential land is "vacant" if for more than 6 months in the preceding calendar year it was not used and occupied as a principal place of residence, by a permitted occupant, or for one of the exempt purposes set out in the Act.
Key exemption categories under the Land Tax Act 2005 (Vic) Part 6:
- Holiday home exemption — where the property is used by the owner (or a relative) as a holiday home for at least 4 weeks (continuously or in aggregate) in the year, subject to conditions on the owner having a separate principal place of residence elsewhere. - Property used for work — where the owner uses the property for work occupancy for at least 140 days, subject to conditions. - Property changed ownership during the year — narrow ownership-change carve-out. - Property under construction or renovation — exemption for a defined period while genuine works are underway, subject to evidence requirements. - Probate / death of owner — exemption for a defined period following the death of an owner.
Exemptions are not automatic. The owner must lodge a notification with SRO Victoria via the SRO online portal each year identifying the property as either vacant (and subject to VRLT) or covered by an exemption (with evidence). Failure to notify is itself a contravention.
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Pre-settlement checks for a Victorian residential purchase
Section 95 land tax clearance certificate. The conveyancer should obtain a certificate from SRO Victoria under section 95 of the Taxation Administration Act 1997 (Vic). The certificate confirms the amount of any current and accrued land tax (including ordinary land tax, absentee owner surcharge, and VRLT) attributable to the property. Apply at least a few weeks before settlement; the certificate is generally valid for a defined period.
Vendor disclosure and warranty. The contract of sale (Section 32 Vendor's Statement under the Sale of Land Act 1962 (Vic)) requires disclosure of various charges. Vendor warranties should specifically address vacancy status during the vendor's ownership and any unnotified VRLT liability. If the property has been vacant during the vendor's ownership, query whether VRLT was notified and paid for each year.
Settlement adjustment. Land tax (including VRLT) is generally apportioned between vendor and purchaser at settlement based on the days each holds the property in the assessment year. The mechanics depend on whether the property is held on a single holding or part of a vendor's land tax aggregation. For most residential purchases the apportionment is straightforward; for vendor portfolios it is more complex.
Forward-looking risk assessment for the buyer. If the buyer is acquiring a property that has been vacant in the vendor's ownership and the buyer also intends to leave it vacant (for whatever reason — pending renovation, intended demolition, buy-and-hold), VRLT will accrue against them in the buyer's ownership. Advise the buyer of the rate and the SRO notification obligation each year.
Foreign-purchaser overlay. Absentee owner surcharge under Part 5 of the Land Tax Act 2005 (Vic) applies on top of ordinary land tax for absentee owners. A foreign-person buyer is generally an absentee owner, increasing the ongoing carrying cost of the property. Combine with foreign purchaser additional duty at acquisition.
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NSW, QLD and other states — the equivalent checks
NSW. No statewide VRLT in the Victorian form. NSW does impose a foreign-owner land tax surcharge under the Land Tax Act 1956 (NSW), administered by Revenue NSW. Pre-settlement, obtain a land tax certificate under section 47 of the Land Tax Management Act 1956 (NSW). The certificate confirms current and accrued land tax (including foreign-owner surcharge where applicable). Some local councils in NSW have explored vacancy-targeted rate differentials at the council level; verify with the relevant council.
Queensland. No state VRLT in the Victorian form. Queensland imposes a foreign land tax surcharge on land owned by foreign persons. Pre-settlement, obtain a land tax clearance certificate from Queensland Revenue Office. Apportion at settlement.
Western Australia. WA does not currently impose a state-level vacancy land tax, though policy in this area has been reviewed. Pre-settlement, obtain a land tax certificate from RevenueWA.
South Australia. SA imposes ordinary land tax and a foreign owner surcharge. No VRLT in the Victorian form. Pre-settlement, obtain a land tax certificate from RevenueSA.
Tasmania. TAS imposes ordinary land tax (with thresholds reviewed in recent years) and a Foreign Investor Land Tax Surcharge. Pre-settlement, obtain a land tax clearance from the State Revenue Office of Tasmania.
ACT. ACT operates a rates-based system, with general rates and land tax (where the property is rented out). Pre-settlement, request the relevant certificate from the ACT Revenue Office.
NT. NT does not have a general state-level land tax. Pre-settlement checks centre on rates and any other charges. Verify with the Territory Revenue Office.
The general principle across all states: do not settle without a current land tax / vacancy / surcharge clearance certificate, and ensure correct apportionment in the settlement statement. The risk of inheriting unpaid statutory charges is exactly what these certificates are designed to surface.
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Contract clauses worth tightening
Vendor warranty on vacancy. Add an explicit vendor warranty that the property has not been vacant within the meaning of the relevant state legislation, or, if it has, that all required notifications have been made and all assessed VRLT (or equivalent) has been paid. This warranty supports recovery if a later VRLT assessment lands.
Survival of warranty post-settlement. Confirm the warranty survives settlement so that any post-settlement reassessment by SRO Victoria for vendor-ownership periods is recoverable from the vendor under the contract.
Settlement statement detail. Where land tax is being adjusted at settlement, the statement should separately identify ordinary land tax, absentee owner surcharge and VRLT, so any post-settlement queries can be reconciled item-by-item.
Off-the-plan and house-and-land. Properties under construction may have an exemption from VRLT for a defined construction period, but the exemption requires positive notification and is time-limited. Confirm where in the construction lifecycle the property is and what the buyer needs to do.
For our companion articles on other current housing measures, see Help to Buy shared-equity, First Home Guarantee 5% deposit, foreign buyer ban and FIRB and federal vs state housing measures 2025-26. To find a conveyancer with experience in VRLT-affected transactions, browse conveyancers in Melbourne and Sydney.
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FAQ
Q: My client is buying a holiday home in regional Victoria. Does VRLT apply? A: From 1 January 2025 VRLT applies to residential land anywhere in Victoria. The holiday home exemption under the Land Tax Act 2005 (Vic) can apply where the owner uses the property as a holiday home for at least 4 weeks in the year and meets the other conditions (including having a separate principal place of residence). Confirm the exemption settings and advise the buyer they must notify SRO each year. Q: We're settling on 15 January. The property was vacant in 2025. Is my buyer client liable for VRLT for 2026? A: VRLT for the 2026 assessment year is generally based on vacancy in calendar year 2025, with the owner at the relevant assessment date (typically 31 December 2025) liable. That ownership date is before settlement, so the vendor is generally liable. The vendor's clearance certificate and the settlement adjustment should make this clear. Future-year VRLT (for 2027, based on 2026 vacancy) will fall on the buyer if the property is vacant after settlement. Q: My buyer wants to buy and demolish. Will VRLT or the new metropolitan undeveloped-land levy apply during the holding period? A: VRLT can apply where land is vacant (i.e. no residence on it being used). The metropolitan Melbourne undeveloped residential land levy applies from 1 January 2026 to land that has been undeveloped for 5 or more consecutive years, broadly targeting land banking. Demolition for genuine redevelopment is generally not the intended target, but the construction/redevelopment exemption requires positive notification and is time-limited. Get the buyer to engage with SRO Victoria as soon as demolition is scheduled. Q: How is the absentee owner surcharge different from VRLT? A: Absentee owner surcharge is an additional rate of land tax applied to absentee owners regardless of vacancy. VRLT is an additional tax applied to vacant land regardless of who owns it. A foreign owner with a vacant property can be liable for ordinary land tax + absentee owner surcharge + VRLT, all on the same property in the same year. Q: Does VRLT apply to commercial property? A: VRLT is specifically a "residential" land tax. Commercial property is not within its scope. However, mixed-use property with a residential component, or commercial property zoned for residential use, can fall within scope depending on the property's classification. Get a clear view from SRO Victoria for borderline cases.---
Sources
- State Revenue Office Victoria — Vacant Residential Land Tax: sro.vic.gov.au — VRLT - State Revenue Office Victoria — Absentee owner surcharge: sro.vic.gov.au — absentee owner surcharge - Land Tax Act 2005 (Vic): legislation.vic.gov.au — Land Tax Act 2005 - State Taxation Acts Amendment Act 2024 (Vic): legislation.vic.gov.au — search Acts - Revenue NSW — Land tax: revenue.nsw.gov.au — land tax - Queensland Revenue Office — Land tax: qro.qld.gov.au — land tax - RevenueWA — Land tax: revenuewa — land tax - RevenueSA — Land tax: revenuesa.sa.gov.au — land tax - State Revenue Office Tasmania — Land tax: sro.tas.gov.au — land tax - ACT Revenue Office — Land tax and rates: revenue.act.gov.au — land tax - State law societies / find a conveyancer: lawcouncil.org.au
Information in this article is general and current as at 19 May 2026. VRLT rates and exemption settings change as the Victorian regime is reviewed; verify against the SRO Victoria page for any specific transaction.
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