What every investor needs to know before expanding their property portfolio and land holdings in Australia.
Land tax has long been one of the more confusing parts of the Australian property landscape—especially for investors who hold properties across multiple states. Each jurisdiction follows its own rules, thresholds, assessment dates, and charging methods.
As a result, two properties of similar value can attract vastly different tax liabilities depending on where they are located.
Recent changes, particularly in Victoria, have widened the gap between jurisdictions even further. For new and experienced investors alike, understanding land tax has become an essential part of strategic portfolio planning.
This guide breaks down what land tax is, how it’s calculated, how each state and territory applies it, and what foreign investors must account for before making strategic decisions.
What Is Land Tax and When Does It Apply?
Land tax is a recurring charge based on the unimproved value of land owned in a state or territory. Importantly, land tax applies to the value of the land only, not the buildings or improvements.
Most homeowners never encounter land tax because the principal place of residence is typically exempt. However, land tax commonly applies to:
- Investment properties
- Vacant land
- Holiday homes
- Commercial land
- Land held in trusts or companies
Exemptions vary significantly between jurisdictions, particularly for primary production, charitable use, or special-purpose properties.
How Land Tax Is Calculated
Although each state has its own method, most calculations follow these steps:
1. Unimproved land value assessment
The Valuer-General of each state determines the value of the land, usually annually or through rolling averages.
2. Thresholds
Many states offer a tax-free threshold—land below this value attracts no land tax.
3. Flat or progressive tax rates
Tax rates escalate as land value increases, especially in states with progressive models.
4. Aggregation
Land owned in the same state is typically aggregated, meaning tax is based on total land value, not per-property valuation.
5. Taxing date
Each state sets a specific date on which property ownership is assessed for the year.
Key Land Tax Concepts for Investors
Taxing Date
This is the date that determines which properties you legally “own” for that year’s land tax assessment. Dates vary across jurisdictions.
Clearance Certificate
A document used during settlement to ensure a buyer does not inherit unpaid land tax from the previous owner.
Role of the Valuer-General
This state office sets the unimproved land value used to calculate land tax and local council rates.
Common Exemptions
- Principal place of residence
- Primary production land
- Approved charitable use
- Certain categories such as retirement or aged-care facilities
State-by-State Land Tax Guide
Below is a simplified overview for investors. Rates may change annually, so always check current government calculators before making investment decisions.
New South Wales (NSW)
NSW offers one of the highest and most generous thresholds in the country, attracting long-term investment commitment from investors looking to build and preserve generational wealth.
- General threshold: $1,075,000 (2025)
- Progressive rates:
- $100 + 1.6% above the threshold
- 2% for land above the premium threshold ($6.571 million)
Taxing date: 30 June More information: This Revenue NSW page provides detailed and up-to-date guidance on land tax and surcharge land tax.
Victoria (VIC)
Victoria uses a progressive system across aggregated landholdings and has one of the lowest thresholds nationally. Recent regulatory changes have been widely criticised for discouraging investors.
- General tax-free threshold: $50,000 ($25,000 for trusts)
- Top marginal rate: up to 2.65%
- Additional charges may include:
- COVID-19 Debt Levy
- Absentee owner surcharge
- Vacant Residential Land Tax
Taxing date: 31 December More information: The State Revenue Office page outlines the rules for residential, commercial and vacant land, including exemptions and concessions.
Queensland (QLD)
Queensland applies tiered land tax rates depending on ownership structure. Land tax is based on the total taxable value of an owner’s Queensland freehold land.
- Individuals: threshold $600,000
- Companies, trustees & absentees: threshold $350,000
- Rates: approx. 1% to 2.75%
- Surcharges: may apply to foreign or absentee owners
Taxing date: 30 June More information: The Queensland Revenue Office page provides a comprehensive and frequently updated land tax guide.
South Australia (SA)
SA applies progressive land tax rates with a relatively high general threshold. Land tax includes base amounts (indexed annually) plus additional charges on land value above each threshold.
- General threshold (2025–26): $833,000
- Trusts: may access general rates if eligibility criteria are met
- Rates: 0.5% to 2.4%
Taxing date: 30 June More information: The RevenueSA page provides provides guidance on assessment across aggregated site values.
Western Australia (WA)
Western Australia applies land tax based on aggregated holdings of all non-exempt land held in the same ownership. The WA taxable value for land is the lesser of the current unimproved value of the land or 150% of the previous year’s unimproved value.
- Threshold: $300,000
- Rates: 0.25% to 2.67%
- Additional charges may apply for special trusts or foreign owners.
Taxing date: 30 June More information: The WA Department of Treasury and Finance page explains WA’s land tax structure and calculation method.
Tasmania (TAS)
Tasmania, like Victoria, has one of the nation’s lowest thresholds. Thresholds are frequently reviewed and updated and land tax is calculated on aggregated landholdings.
- Threshold (2025–26): $125,000
- Rates:
- 0.45% for land under $500,000
- Up to 1.5% for land above $500,000
Taxing date: 1 July (commonly assessed mid-year) More information: The Tasmanian State Revenue Office page provides detailed information about land tax assessment, exemption, rebates and foreign investor surcharges.
Australian Capital Territory (ACT)
The ACT uses a hybrid system combining a fixed annual charge with progressive marginal rates. Land tax is assessed quarterly, not annually. The fixed charge increases annually by 5%, and progressive rates are reviewed yearly.
Land tax applies to most non-principal residences, including vacant properties, rented dwellings and trustee-owned property. Commercial properties are exempt.
- Starting charge (2025–26): $1,693 + 0.54% (for land valued under $150,000)
- Top rate: 1.26% for land above $2 million
Taxing frequency: Quarterly More information: The ACT Revenue Office page provides updated schedules each financial year.
Northern Territory (NT)
The Northern Territory is unique— It does not charge land tax. However, investors still face standard stamp duty and foreign investment rules.
This can make NT attractive for investors, though other factors such as yield, growth patterns, and rental demand should also be considered.
Foreign Purchaser Duty & Land Tax Surcharges
Foreign investors face additional charges when acquiring or holding property in Australia. These apply on top of standard transfer duty and land tax.
All Australian states impose a foreign purchaser duty surcharge, typically on residential—and in some cases, primary production—land. Key points:
- Applies to direct purchases and indirect acquisitions (e.g., buying units or shares in landholding entities).
- Surcharge rates can reach up to 9% above standard transfer duty.
- Significantly increases acquisition costs for foreign investors.
NSW, VIC, QLD, TAS and the ACT also impose an annual surcharge on foreign-owned land.
- Rates can reach up to 5% on top of general land tax rates.
- Can materially reduce net yield, particularly for high-value portfolios.
While "foreign person" definitions vary slightly across jurisdictions, common criteria include:
- Non-resident individuals who are not Australian citizens
- Companies incorporated overseas or majority foreign-owned
- Trusts where foreign persons control or significantly benefit
- Complex structures with substantial foreign interest
These surcharges effectively distinguish ownership on the basis of nationality or foreign control and are intended to regulate foreign participation in the residential property market.
Considerations for Investors
Land tax directly affects annual holding costs and net yield. As valuations and legislation change, liabilities can rise significantly. Strategic planning is essential.
Before purchasing, investors typically:
- Request a land tax clearance certificate during due diligence
- Use each state’s official land tax calculator
- Obtain long-term tax modelling from an accountant or advisor
Common strategies include:
- Using appropriate ownership structures
- Diversifying holdings across states most suitable for the planned holding period
- Conducting annual portfolio reviews
Final Word
Land tax is an unavoidable element of property investing in Australia, but with the right knowledge, it doesn’t need to be a source of confusion. Understanding each state’s system—including thresholds, exemptions, surcharge regimes and assessment processes—allows investors to make informed, strategic decisions.
It is also important to note that any income earned from property or land, as well as profit made on the sale of assets, is subject to federal income tax. Foreign investors must also file annual tax returns with the Australian Taxation Office (ATO).
Whether you're purchasing your first investment property or expanding a national portfolio, staying informed about land tax will help you manage risk, plan effectively, and maximise long-term returns.
