Land Tax

Land tax is an annual tax levied by state and territory governments on the unimproved value of land you own. Each state has different rates, thresholds, and exemptions, but all states (except the Northern Territory, which doesn't have land tax) exempt your principal place of residence from land tax. The tax is assessed on the combined value of all your taxable land in a state — so owning multiple investment properties increases your land tax obligation.

For example, in NSW for 2026, land tax applies to land values above $1,075,000 at a rate of $100 plus 1.6% of the excess, with a premium rate of 2% applying above $6,571,000 (these general and premium thresholds were frozen by the NSW Government from 1 January 2025). Rates and thresholds vary significantly between states — Victoria, Queensland, and South Australia have different structures, with some states applying surcharges for foreign owners, trust ownership, or vacant residential land.

Land tax is calculated on the unimproved value of the land (i.e., the land value excluding buildings and improvements), as determined by the Valuer-General in each state. For investment properties, land tax is a deductible expense against rental income. Land tax is an important consideration for property investors as it can significantly impact cash flow, particularly in states with lower thresholds. Some investors spread investments across multiple states to take advantage of each state's tax-free threshold.