Yes, you generally pay land tax on vacant land in Victoria once the combined site value of all the land you own in the state reaches $50,000, or $25,000 if the land is held in a trust. Vacant land is not treated any differently from land with a house on it for general land tax purposes, and if the block is zoned residential and sits empty, a second tax called the Vacant Residential Land Tax can apply on top.
How the Tax Is Calculated on an Empty Block
The State Revenue Office assesses land tax once a year based on what you own at midnight on 31 December.1State Revenue Office. Understanding Land Tax The figure it uses is the site value, which is the value of the land alone, without buildings, fences, or other improvements. The Valuer-General Victoria supplies these values to the SRO on 1 January each year.2State Revenue Office. Site Values and Land Tax
Because site value already strips out any buildings, an empty block and the identical block next door with a house on it carry the same land tax exposure. Whether your land has a house, sits bare, or grows weeds does not change the calculation. Income doesn’t come into it either. The SRO doesn’t care what the land earns; it cares what the land is worth.2State Revenue Office. Site Values and Land Tax
The other point that catches vacant-land owners out is aggregation. The SRO adds the site values of every taxable parcel you own and applies the rates to the total. Three blocks each worth $20,000 combine to $60,000, which sits above the threshold and triggers a bill, even though no single block would on its own.
Land Tax Rates for 2026
The general rates below apply from the 2024 land tax year onward, including 2026:3State Revenue Office. Land Tax Current Rates
- Under $50,000: no tax
- $50,000 to under $100,000: $500
- $100,000 to under $300,000: $975
- $300,000 to under $600,000: $1,350 plus 0.3% of the amount above $300,000
- $600,000 to under $1,000,000: $2,250 plus 0.6% of the amount above $600,000
- $1,000,000 to under $1,800,000: $4,650 plus 0.9% of the amount above $1,000,000
- $1,800,000 to under $3,000,000: $11,850 plus 1.65% of the amount above $1,800,000
- $3,000,000 and above: $31,650 plus 2.65% of the amount above $3,000,000
The lower brackets are flat amounts, not percentages. Combined vacant land worth $70,000 attracts a flat $500, not a percentage of $70,000. The marginal percentage rates only start biting from $300,000 upward.
Land held in a trust is taxed on a separate scale. The threshold is $25,000, and the marginal rates in each bracket are steeper. A trust with land valued between $25,000 and $50,000 pays $82 plus 0.375% of the amount above $25,000.3State Revenue Office. Land Tax Current Rates At the top bracket, trusts and general taxpayers pay the same 2.65%.
The Extra Tax on Vacant Residential Land
On top of general land tax, Victoria charges a separate Vacant Residential Land Tax on residential property left unoccupied for more than six months in the preceding calendar year.4State Revenue Office. Understanding Vacant Residential Land Tax The tax was previously limited to inner and middle Melbourne councils, but from 1 January 2025 it applies to vacant residential land across every council area in the state.5Parliamentary Budget Office. Vacant Residential Land Tax – Tax Specifications and Number of Liable Properties
Unlike general land tax, the VRLT is calculated on capital improved value (CIV), which includes any buildings. The rates escalate for consecutive years of vacancy:4State Revenue Office. Understanding Vacant Residential Land Tax
- First year vacant: 1% of CIV
- Second consecutive year: 2% of CIV
- Third consecutive year and beyond: 3% of CIV
A property counts as vacant if it hasn’t been used as someone’s home or rented under a genuine lease for the required six months. The VRLT sits on top of general land tax, so the same property can attract both in one year.
The VRLT targets residential land, which generally means land zoned or used for residential purposes. An empty block in a residential zone can be caught if the SRO treats it as vacant residential land, though a genuinely bare block will have a CIV closer to its site value because there are no buildings to add value.
The 15 February Notification
If you own residential property that was vacant for more than six months in the preceding calendar year, you must notify the SRO by 15 February.4State Revenue Office. Understanding Vacant Residential Land Tax Missing the notification can bring penalty tax and interest, and the SRO cross-checks data with other government agencies to find non-compliant properties.5Parliamentary Budget Office. Vacant Residential Land Tax – Tax Specifications and Number of Liable Properties You still need to notify even if the property qualifies for an exemption; you report the vacancy and claim the exemption through the same process.
When Vacant Land Can Be Exempt
Being empty is not itself an exemption. But several specific categories can lift the tax off vacant land.
Building Your Home
If you own vacant land and are building a home you intend to live in, the construction exemption can cover the land for up to four tax years from when works start. You have to plan to occupy the home as your principal place of residence for at least six months beginning on or before the qualifying occupation date, and you cannot earn income from the land during the exemption period.6State Revenue Office. Exemption for Construction or Renovation of a Principal Place of Residence The exemption also flows through to the VRLT.
Primary Production
Land used primarily for farming, grazing, cropping, or other primary production activities can be exempt from general land tax. The rules differ depending on whether the land sits wholly outside greater Melbourne, inside greater Melbourne, or in an urban zone. Land being prepared for primary production can also qualify if it will be actively used within 12 months, and the SRO can extend that preparation window to 24 months on application. If primary production stops, you must notify the SRO immediately or face penalties.7State Revenue Office. Primary Production Land Exemption
Holiday Home Use
For the VRLT, a property used as a holiday home by you or close relatives for at least four weeks in the calendar year can be exempt. The four weeks don’t need to be consecutive, and visits by your spouse, children, siblings, parents, grandparents, or grandchildren all count. The SRO looks at factors like the distance between the holiday home and your main residence when deciding whether the use is genuine. Companies and trusts that owned a holiday home as at 28 November 2023 may also qualify from 1 January 2025 onward.5Parliamentary Budget Office. Vacant Residential Land Tax – Tax Specifications and Number of Liable Properties
Owner-Occupied Vacant Land From 2026
From 1 January 2026, a new exemption covers certain owner-occupied vacant land valued under $300,000 that contains a temporary residence such as a caravan, tent, or shed. It’s aimed at owners who live on their land but don’t qualify for the standard principal place of residence exemption because there’s no permanent building. The temporary structure still has to meet the relevant requirements, and not every arrangement will qualify.8State Revenue Office. Principal Place of Residence Exemption
Land That Cannot Be Developed or Sits Alongside Your Home
For the VRLT, land the Commissioner of State Revenue accepts cannot be used or developed for residential purposes may be exempt, as can unimproved land contiguous with your principal place of residence that enhances your home and is used solely for your private benefit.5Parliamentary Budget Office. Vacant Residential Land Tax – Tax Specifications and Number of Liable Properties Properties that changed hands during the preceding year may also be exempt from the VRLT. Any land already exempt from general land tax is automatically exempt from the VRLT as well.
Overseas Owners Pay More
If you own Victorian land but are not an Australian citizen or permanent resident, do not ordinarily reside in Australia, and were absent from Australia on 31 December or for more than six months of the preceding calendar year, you are classified as an absentee owner. From the 2024 land tax year, absentee owners pay a 4% surcharge on the total taxable value of their Victorian land, on top of the general rates and, where applicable, the VRLT. Corporations incorporated outside Australia and trusts with absentee beneficiaries can also fall into this category.
If the Assessment Looks Wrong
The SRO issues land tax assessment notices between February and June each year.9Land.vic.gov.au. Land Tax Valuations You have 60 days from receiving the notice to lodge a formal objection.10State Revenue Office. Lodging an Objection Form Late objections need a reason for the delay, and the SRO can reject them if none is given.
Two different objection paths exist, and picking the wrong one wastes weeks. If you’re disputing the legal basis of the assessment (arguing an exemption should apply, for example), you lodge an assessment objection. If you’re disputing the site value or capital improved value the calculation is built on, you lodge a separate land valuation objection.10State Revenue Office. Lodging an Objection Form Filing the wrong type means starting over.