Owning Property in Victoria in 2026: The Tax Obligations Catching Owners Out

Crownmark Lawyers | Property & Conveyancing

Most people think the legal work on a property ends at settlement. Contracts are exchanged, the loan is drawn down, the keys change hands, and the file is closed. What that view misses is that owning property in Victoria carries its own ongoing obligations, ones that exist independently of how or why the property was bought, and that keep applying for as long as you hold it. In 2026, several of those obligations have widened in scope and are being enforced more actively than before, which means owners who have not looked at their compliance position since settlement day are more exposed than they realise.

This article sets out what has changed, what it means if you own a home you are not living in, a holiday house, an investment property, or land you intend to develop, and where the risk of getting it wrong has increased.

The first shift is reach. Vacant residential land tax, once limited to a handful of inner Melbourne councils, now applies across the whole of Victoria and reaches further again from January 2026. The second is enforcement. The short stay levy introduced in 2025 now has real lodgement deadlines and real consequences for missing them. The third is scrutiny. The State Revenue Office has told property owners directly that 2026 is a compliance year, with data-matching aimed squarely at exemptions and ownership declarations that do not hold up.

Here is what that means if you hold a property that sits empty for part of the year, take short-stay bookings, are sitting on undeveloped land, or have come to hold a property you did not expect to, such as one still going through a deceased estate.

What Has Changed: Vacant Residential Land Tax Now Reaches Further

The Tax Applies Statewide and Escalates Each Year

Vacant residential land tax was introduced in 2018 and, until recently, applied only to a defined group of inner and middle Melbourne councils. From 1 January 2025, it was extended to all vacant residential land across Victoria, including the Mornington Peninsula, the Surf Coast, and regional holiday areas that were never previously in scope. The rate itself has also changed. Rather than a flat charge, the tax now escalates the longer a property remains liable: 1 per cent of the property's capital improved value in the first year it is liable, 2 per cent in the second consecutive year, and 3 per cent in the third and each year after that.

From 1 January 2026, the tax reaches further still. It now extends to land in metropolitan Melbourne that has remained undeveloped for five years or more and is capable of residential development, and to residential units that have a partially completed fit-out but have never been occupied. Owners who assumed vacant residential land tax was a Melbourne inner-suburb problem, or a problem for empty houses rather than empty blocks, are the group most likely to be caught without realising it.

IMPORTANT: You must notify the State Revenue Office by 15 February each year if your property was vacant at any point in the preceding calendar year, even if you believe an exemption applies. The exemption is not automatic. Failing to notify, rather than failing to qualify for an exemption, is what most commonly turns into a penalty.

The Short Stay Levy Is Now a Real Compliance Obligation

Registration and Return Deadlines

Since 1 January 2025, a levy of 7.5 per cent applies to short stays of under 28 consecutive nights booked in Victoria, whether the booking is made through a platform or accepted directly by the owner. For most owners, this is not a new tax they pay on top of their return, it is a collection and reporting obligation that now carries firm dates. Owners and platforms with total short-stay bookings under $75,000 in the 2025 calendar year were required to register and lodge their first annual return by 30 January 2026. Those above that threshold must lodge quarterly, with the next instalment due by 30 April 2026.

The practical risk is not the rate, which is modest, but the compliance step. Where an owner has failed to register or lodge, the State Revenue Office can pursue recovery of the unpaid levy together with penalties, and by the time that happens the paperwork trail is usually harder to reconstruct than it would have been at the time of the booking.

The State Revenue Office Is Actively Enforcing in 2026

Alongside the changes to what is taxed, the State Revenue Office has been explicit that 2026 is a heightened compliance year. Its stated focus includes incorrectly claimed principal place of residence and primary production exemptions, undeclared absentee ownership, land held in trusts or by foreign owners, and vacant residential land tax notifications that were never lodged. The absentee owner surcharge, an additional 4 per cent land tax loaded on top of the ordinary rate, applies broadly to residential and commercial land held by foreign owners, and the notification deadline for absentee status is 15 January each year, ahead of the vacant residential land tax deadline in February.

The Office is also using data-matching tools drawing on utility records and other sources to identify inconsistencies between what an owner has declared and how a property is actually being used. Land tax assessments for 2026 are issued from late January, and owners have 60 days from the date of an assessment to object if the details are wrong, a window that is easy to miss if the assessment is not reviewed as soon as it arrives.

If You Are Holding Property You Did Not Expect To

Much of this falls hardest on owners who do not think of themselves as investors or developers at all. A holiday home only qualifies for the vacant residential land tax family-use exemption if it is genuinely used by the owner or a qualifying family member for at least four weeks of the year, and if the owner's own principal residence is in Australia. Land bought with a development in mind, but left untouched through approvals, finance, or simple delay, can now attract vacant residential land tax in its own right once it passes the five-year threshold. And a person who begins hosting short stays informally, without registering, can accumulate a levy liability well before they think of it as a business.

There is also a less obvious group: executors and administrators dealing with a deceased estate that includes a home. A property can sit vacant for months while probate is obtained and the estate is administered, which is often unavoidable, but it does not pause a vacant residential land tax notification obligation. Combined with the rise in probate fees discussed in our earlier article on Wills in Victoria, an executor can be facing a probate application fee, an unnotified land tax exposure, and a property that cannot easily be sold until the grant is made, all at the same time. Getting advice on the property side of an estate early, alongside the Will and probate advice, is what prevents that from compounding.

What This Means For Your Situation

Property ownership in Victoria has not become more complicated because people are doing anything differently. It has become more complicated because the compliance net around simply holding property, rather than buying or selling it, has widened, and the State Revenue Office is actively checking that owners have kept up. A property that was straightforward when it was purchased can quietly become a source of unnotified liability years later, purely because of how it happens to be used, or not used, in a given year. Reviewing your obligations against how each property is actually being held, rather than assuming last year's position still applies, is the modest step that avoids an assessment and a penalty arriving without warning.

Crownmark Lawyers advises individuals, investors, and executors on property transactions, structuring of property holdings, and compliance with Victoria's land tax, vacant residential land tax, and short stay levy regimes, on a fixed fee with the principal handling each file. If you own a property that is not your main residence, hold land you intend to develop, or are administering an estate that includes property, you are welcome to get in touch.

Harjit Mahindroo

Managing Partner

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This article is general information about Victorian property and taxation law and is current as at July 2026. It is not legal advice and does not take account of your particular circumstances. The obligations described are administered by the State Revenue Office under the Land Tax Act 2005 (Vic) and related legislation, and rates, thresholds, and deadlines are reviewed periodically, so the figures that apply are the ones current at the date in question. For advice on your situation, please contact us or another qualified Australian legal practitioner.