📅 Rates updated: FY 2025–26·Sources: SRO VIC · Revenue NSW · QLD Revenue · RevenueSA · RevenueWA · SRO TAS
How land tax works in Australia
Land tax is calculated annually on the total land value you own in each state, with your principal residence excluded. Each state uses a progressive (bracketed) rate structure: the more land value you hold, the higher the rate on the excess above each threshold.
The critical concept for portfolio investors is aggregation: all your investment properties in a state are combined for land tax purposes. Two properties with $400,000 land value each ($800,000 combined in VIC) push you well above the $300,000 threshold into the higher brackets — resulting in far more land tax than you might expect when evaluating each property in isolation.
Land tax is a deductible holding cost — it can be claimed against rental income, reducing your net taxable position. At a 37% marginal rate, land tax of $5,000 costs you $3,150 after tax.
State-by-state land tax guide
| State | Tax-free threshold | Starting rate above threshold | Top rate |
|---|
| VIC | $300,000 | $375 + 0.20% | 2.55% above $3M (+ COVID levy) |
| NSW | ~$1,075,000 | $100 + 1.60% | 2.00% above ~$6.57M |
| QLD | $600,000 | $500 + 1.00% | 2.75% above $5M |
| SA | ~$723,000 ¹ | 0.50% | 1.25% above ~$1.35M |
| WA | $300,000 | ~0.25% | ~2.67% above $5.5M |
| TAS | $100,000 | 0.55% | 1.50% above $500,000 |
| ACT | N/A | General Rates system | — |
| NT | N/A | No land tax | — |
General (individual) investment property rates. Trust rates differ in most states and are generally higher. VIC figures exclude the COVID debt levy (applies 2024–2033). NSW premium threshold (~$6.57M) and SA threshold (¹ adjusted annually) — confirm current figures with each state revenue office.
Frequently asked questions
What is land tax?
Land tax is an annual state government tax levied on the unimproved value of land you own — excluding your principal place of residence. Each Australian state (except the NT) imposes land tax using its own thresholds, rates and rules. It is a holding cost for property investors that increases as your portfolio's land value grows, particularly once you own multiple properties.
Who pays land tax in Australia?
Land tax is paid by individuals, companies, and trusts that own taxable land above the relevant state threshold. Your principal place of residence (the home you live in) is exempt in all states. Investment properties, holiday homes, commercial properties, and vacant land are all subject to land tax. In most states, land is aggregated across all taxable properties you own in that state — so multiple investment properties push you into higher tax brackets faster.
How is land value different from property value?
Land value (also called unimproved site value or unimproved capital value) is the value of the land only — excluding the building, improvements, and fixtures on it. This is typically lower than the total property (market) value. The relevant land value for tax purposes is assessed by the state valuer-general and is shown on your council rates notice. A $900,000 house may have a land value of $400,000–$650,000 depending on location and the proportion of value attributable to the land.
How does land tax affect a property portfolio?
Land tax accelerates sharply as your portfolio grows because states aggregate all investment properties in that state when calculating your total taxable land value. In Victoria, for example, each additional investment property pushes you into higher tax brackets (up to 2.55% above $3M). Two $500,000 land value properties combined = $1,000,000 taxable value, resulting in far higher land tax than if each were assessed individually. This is why portfolio investors often spread holdings across states or hold properties in different entities (noting that trust structures have different, often higher, land tax treatment).
Is land tax deductible?
Yes — land tax is a deductible holding cost for investment properties. It is claimed as a deduction against rental income in the same way as council rates, insurance, and management fees. If you are negatively geared, the deduction increases your rental loss and therefore your tax saving at your marginal rate.
What is the land tax threshold?
Each state has a threshold below which no land tax is payable. Victoria: $300,000; New South Wales: ~$1,075,000 general threshold (adjusted annually — a higher 'premium' threshold of ~$6,571,000 triggers a 2.0% rate); Queensland: $600,000; South Australia: ~$723,000 (adjusted annually — confirm with RevenueSA); Western Australia: $300,000; Tasmania: $100,000. Your principal residence doesn't count toward the threshold — only investment and non-exempt properties are aggregated.
Land tax rates and thresholds are approximate for FY 2025–26. VIC figures exclude the COVID debt levy (an additional annual charge applying 2024–2033 — adds roughly $500–$975+ to most VIC investment property bills). NSW premium threshold (~$6,571,000) and SA threshold are adjusted annually — confirm current figures with each state revenue office. WA rates are indicative only. Trust structures and absentee owners pay different (generally higher) rates. Not financial or tax advice.