What Is Land Tax in Australia and How Does It Affect Property Investors?
Land tax is an annual state government tax on the unimproved value of land you own above a certain threshold. It applies to investment properties, holiday homes, commercial properties and vacant land — but not to your primary residence (principal place of residence) in most states. For investors with multiple properties, land tax can be a significant annual cost that materially affects cash flow.
How Does Land Tax Work?
Each state has its own land tax rules, thresholds and rates. Land tax is assessed on 1 January each year based on the total unimproved land value of all taxable properties you own in that state. It is calculated on the land value only — not the value of buildings or improvements on the land.
Land Tax Thresholds and Rates by State (2026)
| State | Tax-Free Threshold | Rate Above Threshold | Primary Residence Exempt? |
|---|---|---|---|
| Victoria (VIC) | $50,000 (general) / $25,000 (trusts) | 0.2% to 2.55% (progressive) | Yes |
| New South Wales (NSW) | $1,075,000 (2025-26) | 1.6% + $100 above threshold | Yes |
| Queensland (QLD) | $600,000 (individuals) | 1 cent per $1 above $600k to 1.75% | Yes |
| Western Australia (WA) | $300,000 | 0.09% to 2.67% (progressive) | Yes |
| South Australia (SA) | $668,000 (2025-26) | 0.5% to 2.4% (progressive) | Yes |
Note: Rates are indicative for the 2025-26 financial year. Always verify with the relevant State Revenue Office as thresholds are adjusted annually.
Victorian Land Tax — A Closer Look
Victoria has the lowest tax-free threshold in Australia at $50,000 of total taxable land value, meaning investors with even one modest investment property in Melbourne are likely to pay land tax. Key Victoria-specific rules:
- The threshold is $25,000 for discretionary trusts, family trusts and unit trusts
- From 2024, a temporary Windfall Gains Tax applies to rezoning events that increase land value by more than $100,000
- A COVID debt levy surcharge applies in VIC through to 2033 for landholdings above $300,000
- Short-stay properties (Airbnb) may attract a 7.5% short-stay levy on booking revenue from 2025
How to Minimise Land Tax Legally
- Purchase in different states: Land tax thresholds apply per state — owning properties across VIC, QLD and WA means three separate thresholds rather than one combined one
- Principal residence exemption: Your primary residence is exempt — make sure it is correctly registered with your State Revenue Office
- Trust structures: Some trust structures can separate beneficial ownership and reduce aggregation, though VIC’s lower trust threshold reduces this benefit in Victoria
- Timing of purchases: In VIC, land tax is assessed on 1 January — settlement after that date defers liability by one year
Frequently Asked Questions
Is land tax deductible?
Yes. Land tax paid on investment properties is a fully deductible expense against your rental income for income tax purposes. Keep all land tax notices for your tax records.
Who pays land tax — the landlord or the tenant?
Land tax is the landlord’s liability. However, in commercial leases it is common for landlords to pass land tax through to tenants as an outgoing. In residential leases, landlords cannot legally require tenants to pay land tax in most Australian states.
What happens if I don’t pay land tax?
Unpaid land tax accrues interest and penalties and becomes a charge on the land — meaning it must be paid before the property can be sold. State revenue offices can take enforcement action including placing caveats on the title of the property.
Whether you’re buying your first investment property, building a portfolio, or exploring SMSF property investment, the Collings Property Platform gives you access to off-market opportunities, portfolio tracking, investment tools, and property insights powered by GeeVee AI. Join free today and start building your property future. collings.com.au/portal
Find your next property with Collings
Track suburbs, get matched to on-market and off-market listings, and manage your whole property search in one place. Access the Collings property portal.
