Land Tax

Land tax is levied by state and territory governments on the unimproved value of land you own, and it is assessed on the combined value of all your taxable land in that state — not on each property separately. Owning three investment properties in the same state adds their land values together for a single assessment, rather than each getting its own tax-free threshold. Every state except the Northern Territory exempts your principal place of residence, so most people never encounter land tax unless they hold an investment property, a holiday home, or vacant land.

You typically receive an annual land tax assessment notice from your state revenue office based on land values set by the Valuer-General. For NSW in 2026, land tax applies to combined land values above $1,075,000, charged at $100 plus 1.6% of the amount above that threshold, with a higher 2% premium rate applying above $6,571,000 — these thresholds were frozen from 1 January 2025. For investment property owners, land tax is a deductible expense against rental income, so it reduces the net cost of holding the property.

Because thresholds and rates vary significantly between states, and some states apply surcharges for foreign owners, trust ownership, or vacant residential land, land tax can differ sharply for an identical portfolio value depending on where the properties sit. Some investors deliberately spread their holdings across multiple states so each state's tax-free threshold applies separately, rather than concentrating value in one state and triggering a single, larger combined assessment. People often confuse land tax with council rates or stamp duty — the three are separate, with land tax the only one charged annually on the land value itself.