Land tax is a state and territory government tax applied to the unimproved value of land you own as at a specified assessment date each year. It applies to investment properties, holiday homes, and commercial land — but generally not to your primary place of residence (principal place of residence exemption). For property investors, land tax is a significant ongoing cost that varies dramatically by state.
Key Principles of Land Tax
- It’s a state/territory tax: Each state and territory sets its own rates, thresholds, and exemptions
- It applies to the land value, not the property value: The value of the building/improvements is excluded — only the unimproved land value is taxed
- Principal place of residence is exempt in most jurisdictions
- Investment properties are generally fully liable: There is no first investment property threshold exemption in most states — land tax applies from the first dollar of land value above the threshold
- Aggregation: In most states, all land you own in that state is aggregated for threshold purposes — you don’t get a separate threshold for each property
Land Tax Thresholds and Rates by State — 2026
Land tax rules change. Always verify current thresholds with your state revenue office.
New South Wales (Revenue NSW)
- Threshold: $1,075,000 (land value, FY2025–26)
- Rate: 1.6% on land value above threshold, plus $100 base
- Surcharge: Additional 4% land tax surcharge for foreign persons
- Premium threshold at $6,571,000: 2.0%
Victoria (State Revenue Office)
- Threshold: $300,000 (general) — land values above this are taxed
- Rate: 0.2% on $300,000–$600,000; 0.5% on $600,000–$1,000,000; 0.8% on $1,000,000–$1,800,000; increasing tiers above
- Note: VIC threshold is low — affects many metro Melbourne investors
- Absentee/foreign surcharge: 2% additional
Queensland (Queensland Revenue Office)
- Threshold: $600,000 (individuals)
- Rate: 1 cent per $ on $600,000–$1,000,000; then higher rates above
- Company/trust: $350,000 threshold (different rate schedule)
South Australia (RevenueSA)
- Threshold: $534,000 (FY2025–26, approximate)
- Rate: Tiered rates from 0.5% above threshold
Western Australia (Department of Finance)
- Threshold: $300,000
- Rate: $300 on $300,000–$420,000; then percentage-based tiers
- Foreign persons: 2% surcharge
Australian Capital Territory
- ACT uses a different system: Rates and land tax are combined differently — all properties pay rates; investment properties pay additional land tax based on AUV (average unimproved value)
Tasmania
- Threshold: $100,000 (low — broad base)
- Rate: Tiered from 0.55%
Northern Territory
- No land tax — NT does not levy land tax
Land Tax — Key Considerations for Property Investors
1. Land tax is an ongoing cash cost
Unlike some property costs, land tax is not avoidable — if you own investment property above the threshold, you pay. It must be factored into yield calculations.
2. Aggregation increases land tax as you build a portfolio
In most states, all your investment properties in that state are aggregated — their land values combined — for threshold and rate purposes. Owning three properties in Victoria may push your total land value well into higher-rate brackets.
3. Land tax is deductible
Land tax paid on investment properties is a deductible expense for the tax year in which it is paid — reducing your assessable rental income.
4. Trust and company ownership
Some investors hold property in discretionary trusts or companies. Land tax treatment for trusts varies by state — some states apply different thresholds or surcharges to trusts. This is an area where specialist legal and tax advice is important.
Land Tax on Interstate Property
Land tax is assessed state by state — your properties in NSW and VIC are assessed separately in each state. You do not aggregate across states. This can make interstate property investing more tax-efficient from a land tax perspective (spreading across multiple state thresholds).
Related Articles
- Stamp Duty on Investment Properties
- Investment Property Tax Deductions Australia
- Buying Interstate Property
- Property Investing hub
Frequently Asked Questions
Is my home subject to land tax? Your principal place of residence is generally exempt from land tax in all Australian states. The exemption applies per household — you cannot have two principal places of residence for land tax purposes.
Is land tax deductible? Yes. Land tax on investment properties is a deductible expense for income tax purposes in the year it is paid.
How is land value assessed? State revenue offices use government-assessed land values (unimproved capital value) — not market prices. These valuations are updated annually and may not perfectly reflect current market land values. You can dispute a valuation if you believe it is incorrect.
This article provides general financial information only. Land tax thresholds and rates change annually. Verify current figures with your state revenue office. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.