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Over 300 assessments have been issued for vacant residential land tax in a recent compliance investigation.
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Victorian government swoops on vacant properties in tax crackdown
28 May 2024
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A recent investigation by the Victorian government has uncovered 177 empty properties, resulting in 337 vacant residential land tax (VRLT) assessments. The assessments cover the 2019 to 2024 land tax years.
The investigation targeted five apartment block buildings and uncovered a total of 177 properties that were found to be vacant for more than six months and therefore liable for VRLT.
It will now be extended to another 13 apartment towers, as well as houses in the inner and middle suburbs of Melbourne.
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From 1 January 2025, VRLT will be expanded to apply to homes across all of Victoria if they are vacant for more than six months in the preceding calendar year. The tax currently only applies to Melbourne’s inner and middle suburbs.
The Victorian government also reminded owners of properties in Victorian that the use of a vacant residential property in 2024 will impact its liability for VRLT in 2025.
“For example, an apartment not used as a principal place of residence will need to be rented out for at least six months to avoid receiving a VRLT assessment next year,” it stated.
“An escalating rate of tax will also apply, based on the number of consecutive years the land has been liable for VRLT.”
Existing dwellings that are vacant for one year will still pay 1 per cent of the capital improved value, but those vacant for two consecutive years will pay 2 per cent and those vacant for three or more consecutive years will pay 3 per cent.
The Victorian government said this would encourage owners of vacant homes to make these properties available to live in.
“Holiday homes are typically exempt from VLRT, and this exemption has been expanded to include properties held in trust or owned by companies. Any property that is exempt from land tax – including property used for primary production or owned by a charity – is also exempt from VLRT,” it said.
From 1 January 2026, the VRLT will also apply to empty residential blocks in the inner and middle parts of Melbourne.
The Victorian government said this would discourage land banking and incentivise owners to build more homes. The government is also encouraging Victorians to tip off the State Revenue Office about vacant properties that could be used as a home or developed.
Treasurer Tim Pallas said the crackdown on vacant properties would help ease housing pressures across the state.
“Expanding vacant residential land tax will free up empty houses for rent and sale, boosting supply and making homes more affordable,” he said.
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