Recent changes have been made to the Vacant Residential Land Tax (VRLT). If you own residential property that is unoccupied for more than six months in a calendar year, you may be subject to this tax.
Introduced by the Victorian Government in 2018 the Vacant Residential Land Tax (VRLT) aims to improve housing availability by encouraging property owners to avoid leaving residential properties vacant for extended periods.
Previously, this tax applied only to properties in Melbourne’s inner and middle suburbs that were unoccupied for more than six months in the prior calendar year. However, starting 1 January 2025, significant changes will come into effect, broadening its reach statewide and modifying the tax structure.
Statewide Application:
Beginning in 2025, the Vacant Residential Land Tax (VRLT) will no longer be restricted to Melbourne’s suburbs. It will now apply to vacant residential properties throughout Victoria.
Progressive Tax Rates:
The tax rate will increase based on the number of consecutive years a property remains vacant:
Holiday Home Exemption:
This exemption applies to properties used for a minimum of four weeks per year by the owner or a close relative. Companies or trusts are eligible only if they have owned the property continuously since 28 November 2023.
Work Accommodation Exemption:
Available for properties occupied for at least 140 days per year for work-related purposes.
Properties Under Construction or Renovation:
Properties under construction or renovation are exempt for up to two years, with potential extensions granted for delays beyond the owner’s control.
The expansion of the VRLT represents a major change that could impact many property owners who were previously exempt. It’s essential to take the necessary steps to prevent unexpected tax liabilities and penalties.
1 – Review Your Properties – Check if any of your properties were vacant for more than six months in the previous calendar year.
2 – If Your Property Was Vacant for More Than 6 Months, Notify the State Revenue Office (SRO) – You are required to notify the SRO through their online portal by 15 January each year.
This includes:
3 – Ensure Compliance – Failing to notify the SRO or submitting late notifications may result in penalties under the Taxation Administration Act 1997, as well as interest on any outstanding payments.
For more information about the tax and to access the SRO online portal, please visit:
https://www.sro.vic.gov.au/vacant-residential-land-tax
