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In 2025, Victoria’s land tax framework encompasses several key components, notably the general land tax, the expanded Vacant Residential Land Tax (VRLT), and the Absentee Owner Surcharge.

General Land Tax

Land tax is an annual levy on the total taxable value of all land owned in Victoria as of midnight on 31 December of the preceding year (i.e. 2024). Exemptions apply to certain properties, such as principal places of residence and primary production land. The tax rates are progressive, increasing with the total value of taxable landholdings.

Vacant Residential Land Tax (VRLT)

Effective from 1 January 2025, the VRLT has been expanded to apply to all residential properties across Victoria. Previously limited to specific areas in inner and middle Melbourne, this tax now encompasses properties statewide. A property is considered vacant if it remains unoccupied for more than six months in the preceding calendar year. The VRLT is calculated based on the property’s Capital Improved Value (CIV), which includes both the land and any structures on it. The tax rates are progressive, increasing with consecutive years of vacancy:

• First year of vacancy: 1% of the year CIV
• Second consecutive year: 2% of the CIV
• Third consecutive year and beyond: 3% of the CIV

For example, if a property’s CIV is $500,000 and it has been vacant for the first year, the VRLT would be $5,000. If the vacancy continues into the second consecutive year, the tax will increase to $10,000 and to $15,000 in the third consecutive year.

Exemptions to VRLT

Several exemptions to the VRLT are available, including:

• Principal Place of Residence (PPR): Properties occupied by the owner as their main home are exempt.
• Holiday Homes: A property used and occupied by the owner or their permitted occupants for at least four weeks in a calendar year may qualify for exemption.
• Properties Undergoing Significant Renovations: Properties under substantial renovation or construction may be exempt for up to two years from the date a building permit is issued.
• Recent Ownership Changes: Properties that changed ownership in the preceding year are exempt for the following year.

Owners must notify the State Revenue Office (SRO) of any applicable exemptions by 15 January each year.

Absentee Owner Surcharge

An additional surcharge applies to Victorian land owned by absentee individuals, corporations, or trusts. As of 2024, the surcharge rate is 4% of the property’s taxable value. Owners must inform the SRO of their absentee status to ensure compliance.

Key Deadlines

• 15 January: Deadline for notifying the SRO about vacant residential properties and claiming any exemptions for the preceding year.

It’s crucial for property owners to stay informed about these regulations to ensure compliance and optimise their tax obligations. For detailed information and assistance, consulting the State Revenue Office of Victoria or a qualified tax professional is recommended.

As of 2025, there is no indication that land tax rates in Victoria will decrease. In fact, recent policy changes have led to expansions in tax applicability and progressive rate structures.

Conclusion

Given the current policies and recent expansions in tax applicability, it is unlikely that land tax liabilities will decrease in Victoria in 2025. Property owners should stay informed about these regulations to ensure compliance and effectively manage their tax obligations.

To discuss any related property matter herein or other issues, please contact
Mark Ruttner, Managing Director

mr@fvg.com.au 0411 419 674

First Valuation Group
Suite 110/181, St Kilda Road, St Kilda, Victoria, 3182
valuations@fvg.com.au