This article is general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation.
Key takeaways
- Land tax is a state tax on the unimproved value of your land, not the property built on it. Your principal residence is exempt.
- Thresholds vary significantly: Victoria starts at $300,000, Queensland at $600,000, and NSW at $1,075,000.
- If you own multiple properties in the same state, the land values are aggregated, which can push you over the threshold even if no single property exceeds it.
- Land tax paid on an investment property is fully tax-deductible in the year you pay it, reducing the after-tax cost by your marginal rate.
- Properties held in trusts often face lower thresholds or surcharges, particularly in Victoria.
Land tax is one of those costs that catches landlords off guard the first time the bill arrives. You bought an investment property, you are doing everything right, and then a state revenue office sends you a notice for a tax you have never had to think about before. This guide explains what land tax is, who pays it, how it is calculated in the major states, and, importantly, how it affects your tax return.
What Land Tax Is
Land tax is a state and territory tax levied on the unimproved value of land you own. It is not a federal tax and it does not appear on your income tax return as income, but it does affect what you can deduct.
The tax is calculated on the value of the land itself, not the property sitting on it. A valuation is generally set by the state's valuer-general and is updated periodically, often annually. The land value used for land tax purposes is not the same as the market value of your property, though they tend to move in the same direction over time.
Every state and territory has its own land tax regime. The thresholds, rates, and exemptions vary significantly. If you own property in multiple states, you are assessed separately in each one; there is no national offset.
Who Pays It
Land tax applies to investors and property owners who hold land above a certain threshold value in a given state. The key point for most landlords is that your principal place of residence is exempt: you do not pay land tax on the home you live in. You pay it on investment properties, holiday homes, and any other land you own above the threshold. For a full picture of what owning a rental property actually costs each year, see our guide to the cost of owning a rental property in Australia.
If you own property through a company or trust, different rules apply. Trusts in particular are often treated less favourably; some states apply a lower threshold or no threshold at all to trusts. If your property is held in a trust structure, speak to your accountant about how land tax applies.
Queensland
Queensland assesses land tax at 30 June each year. You pay land tax if the total taxable value of your Queensland land exceeds the relevant threshold.
For individuals, the current threshold is $600,000 in total land value. Above that, the tax is calculated on a sliding scale starting at 1 cent per dollar and increasing as the value rises. For land valued between $600,000 and $999,999, the rate is 1%. It steps up to 1.65% between $1 million and $2,999,999, and higher still above that.
Queensland introduced an additional surcharge for foreign investors and, more recently, announced reforms affecting interstate investors who own Queensland property, a measure that has drawn significant attention from landlords with properties across multiple states.
New South Wales
NSW calculates land tax on the total value of all taxable land you own as at 31 December each year.
The land tax threshold for 2025 is $1,075,000, with a premium rate applying above $6,571,000. Between those figures, the rate is $100 plus 1.6 cents for every dollar above the threshold. The threshold is indexed each year, so it is worth checking the current figure with Revenue NSW before you assume you are below it.
One practical point for NSW landlords: if you purchase an investment property during the year, you are assessed at 31 December regardless of when you settled. You could buy in November and receive a land tax assessment for that year.
Victoria
Victoria's land tax year runs to 31 December, and assessments are based on the site value of land at that date.
The general threshold is $300,000, lower than both Queensland and NSW, which means more Victorian landlords are caught by it. The rate starts at $375 plus 0.2% for land valued between $300,000 and $600,000, and increases through several bands above that.
Victoria also applies a trust surcharge of 0.5% on taxable land value held in trusts above $25,000, with no general threshold. If your investment property is held in a family trust, the land tax exposure in Victoria can be considerably higher than for an individual owner.
Other States and Territories
South Australia has a threshold of $723,000 for individuals and applies rates up to 2.4% for higher values. SA also has a different treatment for primary production land.
Western Australia has a threshold of $300,000 for individuals, with rates starting at 0.25%.
Tasmania applies land tax to properties above $100,000, with the rate depending on the land value and ownership type.
The ACT replaced traditional land tax with a broader rates system that applies to all property, including owner-occupied homes. The approach there is quite different from other jurisdictions.
The Northern Territory does not levy land tax.
All thresholds and rates listed in this guide reflect publicly available information as at the time of publication. They are updated regularly, so verify current figures with the relevant state revenue office before making any decisions.
Absentee Owner Surcharges
Most states now apply an additional surcharge to foreign owners and, in some cases, to absentee owners more broadly. These surcharges were introduced to address concerns about land banking by overseas investors.
In Victoria, the absentee owner surcharge adds 4% to the land tax rate for foreign persons who are considered absentees. NSW has an equivalent surcharge land tax of 4% on residential land owned by foreign persons. Queensland recently introduced its own surcharge arrangements.
If you are an Australian citizen or permanent resident living in Australia, these surcharges generally do not apply to you. If you are unsure of your status, particularly if you have recently returned from overseas or hold dual citizenship, confirm with your accountant.
How Land Tax Is Calculated
The calculation is simple enough once you know three things: the taxable value of your land, the applicable threshold in that state, and the rate that applies to the excess.
Here is a simplified example. Say you own an investment property in NSW where the land component is valued at $1,400,000 at 31 December. The 2025 threshold is $1,075,000. The excess is $325,000. At 1.6 cents per dollar, plus the $100 base, your land tax bill for that property would be approximately $5,300.
In practice, if you own multiple properties in the same state, the taxable land values are aggregated. Owning two properties with land values of $600,000 each in the same state may well push you over the threshold, even if neither property exceeds it individually.
Calculate Your Land Tax
Select your state and enter your total taxable land value to see an estimate of your land tax liability.
Select your state and enter your land value to calculate land tax.
Land Tax as a Tax Deduction
Here is the part that matters most at tax time: land tax on an investment property is fully tax-deductible against your rental income in the year you pay it.
The ATO treats land tax as a property holding cost, the same category as council rates. If you receive an assessment and pay it, you claim it as a deduction on your rental income schedule. Keep the assessment notice and your payment confirmation as supporting records.
This means that while land tax is a real cost, its after-tax impact is reduced by your marginal tax rate. For a landlord in the 37% tax bracket, a $5,000 land tax bill effectively costs around $3,150 after the deduction is factored in. If you are negatively geared, land tax is one of the expenses that contributes to the deductible loss offset against your other income. Use the negative gearing calculator to see how land tax and your other holding costs combine to produce a deductible loss.
For a full list of rental property expenses that are deductible, see our guide to rental property tax deductions in Australia. For a breakdown of every expense category and how to treat it, see landlord expenses you can claim. And when you eventually sell, remember that the land value also factors into your cost base for capital gains tax purposes. The capital gains tax calculator can help you estimate that liability.
As always, check with your accountant for advice specific to your situation; the deductibility rules are clear-cut for most landlords, but the specifics can vary depending on your ownership structure and how the land tax was assessed.
Keeping Track of It
Land tax is one of those annual costs that tends to arrive at an unpredictable time and in an amount that varies year to year. It is easy to miss if you are not actively watching for the assessment notice, particularly if your address for correspondence with the state revenue office is out of date.
When you receive a land tax assessment, record it as an expense against the relevant property as soon as you pay it. Attach the assessment notice to the transaction. That way, when tax time comes around, it is already in your records and categorised correctly, rather than something you have to dig out of an email from eight months ago.
propkt lets you log land tax payments against each property with expense tracking and attach the assessment notice directly to the transaction, so you have the documentation your accountant needs without a last-minute scramble. Try it free for your first property.