Land tax is an annual tax levied by state and territory governments on the value of land you own. It applies to investment properties, vacant land, commercial properties, and holiday homes. Your principal place of residence (the home you live in) is generally exempt.
Each state calculates land tax differently, using different rates, thresholds, and valuation methods. The tax is based on the unimproved value of the land, that is, the value of the land itself, not including any buildings or improvements on it.
How It Is Calculated
Most states use a progressive rate structure with a tax-free threshold. You do not pay land tax on the first portion of your total land value. Above the threshold, the tax rate increases as the total value of your land holdings rises.
For example, a state might have a tax-free threshold of $300,000 and a rate of 1.6% on the value above that. If you own investment land worth $500,000, you would pay 1.6% on $200,000, which is $3,200 per year.
The key point is that land tax is assessed on the total value of all your taxable land in that state, not on each property individually. Owning multiple properties pushes you into higher rate brackets.
State Differences
Each state sets its own rates and thresholds:
- NSW, Victoria, and Queensland each have different rate structures and thresholds
- The Northern Territory does not charge land tax
- Tasmania, SA, and WA each have their own systems
- Some states apply surcharges for foreign owners or trusts
Check your state guide or your state's revenue office website for current rates and thresholds.
Is Land Tax Deductible?
Yes. Land tax paid on an investment property is a tax-deductible expense. You can claim it as a deduction against your rental income in the year it is paid.
Why It Matters for Landlords
Land tax is a significant annual cost that many new investors overlook when budgeting for an investment property. It can run into thousands of dollars per year and increases as you acquire more properties (because the total land value pushes you into higher brackets). Factoring land tax into your cash flow projections before you buy is essential. For a full state-by-state breakdown, see our land tax guide for Australian landlords.
propkt tracks land tax as part of your property expenses, so it is automatically included in your net yield calculations and tax-time summaries.