Land Tax in Australia: What Property Investors Need to Know in 2026

Land tax is levied by state and territory governments (not the federal government) on the unimproved value of land (not buildings) owned by an individual, company, or trust above a threshold amount. The unimproved land value is assessed annually by the state valuer-general - it represents what the land would be worth without any improvements (buildings, landscaping, infrastructure).

Crucially, land tax is assessed on your total landholding within each state - not each individual property. If you own three investment properties in NSW with total land values of $800,000, $600,000, and $400,000, you are assessed on the combined $1,800,000. This aggregation means investors can cross thresholds more quickly than they might expect as portfolios grow.

Each state sets its own threshold and rate structure - always verify with the relevant state revenue office as these change annually:

• New South Wales: Land tax applies to land above $1,075,000 (2025 threshold) at 1.6% plus $100. A surcharge of 2% applies to foreign persons. Principal place of residence and primary production land are exempt. Revenue NSW at revenue.nsw.gov.au.
• Victoria: Threshold of $300,000 (general) at rates from 0.2% to 2.55% depending on land value. Significantly lower threshold than NSW - many Victorian investors with even one investment property are liable. Melbourne metropolitan areas attract a higher rate. A trust surcharge of 0.5% applies to land held in trusts (on top of the standard rate). State Revenue Office Victoria at sro.vic.gov.au.
• Queensland: Threshold of $600,000 for individuals at rates from 1 cent per dollar to 2.75 cents per dollar. Companies and trustees have a $350,000 threshold. Queensland does not assess land on a trust surcharge but has a separate rate for companies and trusts. Queensland Revenue Office at qro.qld.gov.au.
• Western Australia: Threshold of $300,000 at rates from 0.15% to 2.67%. Companies and trustees start from $300,000 with no separate surcharge. Revenue WA at wa.gov.au/organisation/department-of-finance.
• South Australia: Threshold of $668,000 (2024-25) at rates from 0.5% to 1.1% on the excess. RevenueSA at revenuesa.sa.gov.au.
• Australian Capital Territory: ACT uses a rates system rather than traditional land tax. Investment properties are subject to general rates on unimproved land value plus an investment supplement. ACT Revenue at revenue.act.gov.au.
• Tasmania: Threshold of $100,000 at 0.45% to 1.5%. Low threshold means many investors are caught. State Revenue Office Tasmania.
• Northern Territory: No land tax.

Not all land is subject to land tax - exemptions vary by state but typically include:

• Principal place of residence: Your main home is exempt in all states. However, the exemption generally only applies to one property - you cannot claim two principal residences simultaneously. If you rent out your home and buy elsewhere, the rental property may become subject to land tax.
• Primary production land: Farms and agricultural land used for primary production are generally exempt, subject to specific use and ownership criteria.
• Charitable and religious organisations: Land owned by registered charities and religious organisations is generally exempt.
• Short-stay transitional properties: Some states have specific rules for properties in the process of being sold or developed - check state-specific rules.
• Holiday homes: Holiday homes you use personally are not exempt from land tax in most states (unlike your principal residence) - they are assessed as investment properties for land tax purposes even if not rented out.

Legal approaches to reduce land tax exposure across a property portfolio:

• Spread properties across states: Land tax is assessed state by state - holding properties in different states means each state applies its own threshold separately. Owning one property in NSW (threshold $1,075,000), one in QLD (threshold $600,000), and one in WA (threshold $300,000) is taxed more favourably than owning all three in one state where the combined land value would exceed the threshold by much more.
• Ownership structure matters: Individual ownership, company ownership, and trust ownership attract different rates and sometimes different thresholds. In Victoria, trusts attract a 0.5% surcharge - holding property personally may be more tax-efficient in that state. Conversely, some structures allow splitting land tax liability. Ownership structure also affects stamp duty, CGT, and income tax - any restructuring requires holistic advice.
• Monitor unimproved land values: State valuers assess land values annually; rapid growth in property values directly increases land tax. Challenge valuations you believe are excessive - each state has an objection process, and incorrect valuations are not uncommon during rapid market movements.
• Land tax is deductible: Land tax paid on investment properties is a tax-deductible expense against rental income. Factor this into your property investment modelling - the after-tax cost of land tax is lower than the invoice amount, particularly for higher-income investors.
• Company or trust structures: While trusts and companies can create land tax surcharges in some states, they may offer benefits in others - including separating land tax assessments if multiple properties are held in different entities. This is highly state-dependent and requires specialist advice.

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