Victoria’s 2026 Property Tax Obligations: Understanding VRLT and Absentee Owner Rules
When you’ve invested time, effort and capital into building your property portfolio, it’s essential to stay informed about the tax obligations that come with land ownership. Two of the most important requirements for Victorian landholders as we move into 2026 are the Vacant Residential Land Tax (VRLT) and the Absentee Owner Surcharge. These rules affect how your land is assessed, how it is used, and what you must notify the State Revenue Office about each year.
Both measures aim to ensure land is being utilised productively — and they carry deadlines that investors and property owners cannot afford to miss.
What Is Vacant Residential Land Tax (VRLT)?
VRLT is a tax that applies to residential land in Victoria that is left unoccupied for more than 6 months in the previous calendar year. In other words, if your property sat vacant for most of 2025, you may be subject to VRLT in 2026.
From 1 January 2026, the rules expand further. VRLT will also apply to land in metropolitan Melbourne that has been undeveloped for at least 5 continuous years and is capable of residential development.
The broader aim is to encourage greater land utilisation and relieve housing pressures. For owners, it requires being aware of your obligations, lodging notifications on time, and also checking if you qualify for an exemption.
Why VRLT Matters
Leaving a property vacant may expose you to additional tax. This includes scenarios where:
Your residential property was unoccupied for more than half of 2025
You own land in Melbourne that remains undeveloped beyond 5 years
You previously notified VRLT, and your circumstances have changed
You believe your land is exempt (a notification is still required)
Failing to notify by the due date may result in penalties, interest and a higher compliance risk.
Key Points About VRLT
1. Notifications Are Due by 15 February 2026
Even if you believe an exemption applies, you must lodge a notification and provide supporting details.
2. Some Land May Be Exempt
Common exemptions include:
Properties genuinely used as a principal place of residence
Holiday homes under certain conditions
Newly purchased or newly built properties
Land undergoing active construction
Note that exemption eligibility must be confirmed, not assumed.
3. Expanded Scope from 2026
Vacant land held for long periods in metropolitan Melbourne that could be developed may now attract VRLT even if no dwelling currently exists.
What Is the Absentee Owner Surcharge?
The absentee owner surcharge applies when Victorian land is owned by individuals, companies, or trusts that are not Australian residents for tax purposes.
This includes:
Australian citizens living overseas long-term
Foreign individuals holding property in Victoria
Foreign corporations or trusts
Landowners whose visa status places them within the “absentee” definition
If you are considered an absentee owner, you must notify the State Revenue Office (SRO) to ensure the correct surcharge is applied.
Why the Absentee Owner Surcharge Matters
This surcharge can significantly increase your overall land tax liability. It is essential to:
Understand whether you meet the absentee definition
Notify by 15 January 2026
Update the SRO if your residency or visa status changes
Missing this deadline may lead to incorrect assessments and penalties.
What You Should Do Next
Whether you own an investment property, vacant land or hold property through a company or trust, now is the time to:
Confirm whether your land was vacant in 2025
Determine if you fall under the absentee owner category
Complete the required notifications before the deadlines
Review your property portfolio in light of the new VRLT rules starting 1 January 2026
Seek advice if you’re unsure. Tax, residency and exemption rules can be complex
The VRLT and absentee owner surcharge are crucial compliance obligations that can significantly impact your property’s annual tax position. With new rules taking effect in 2026, this is the perfect time to review your land holdings and ensure your notifications are correct and up to date.
If you’re uncertain about how these rules apply to you, our Business Services and Tax specialists at Alexander Spencer can assist.
We can help you determine your obligations, assess exemptions and make sure your notifications are lodged before the deadlines, protecting you from unnecessary penalties and ensuring full compliance.