You have done the sums on mortgage repayments, property management fees, and council rates. Then the first land tax assessment arrives and it is bigger than expected. For many investors, land tax is the holding cost they planned least carefully for.
This post explains how land tax works across Australian states, where the differences are sharpest, and what to factor in before you commit to a purchase.
How land tax actually works
Land tax is an annual state or territory-based tax charged on the total taxable value of land you own. A few foundational points that often get missed:
- Land tax is calculated on the unimproved land value, not the combined property value (land plus building). This figure comes from your state's Valuer-General, not the purchase price or market valuation.
- All states and territories exempt your principal place of residence. The tax targets investment properties, holiday homes, and vacant land.
- Land tax is assessed on your total landholdings per state, not per property. If you own two investment properties in Victoria, their land values are combined before working out which bracket applies.
- Land tax is not a federal tax run by the Australian Taxation Office. Each state revenue office sets and administers its own rules.
Each state sets its own thresholds, rates, and assessment rules independently. That single fact explains why the same property can produce a very different holding cost depending on which side of a border it sits.
The state-by-state picture for 2025-26
The thresholds and rates below are sourced from published 2025-26 data aggregated from official state revenue offices. They are a starting point for research, not a substitute for checking the current figures directly with your state's revenue authority before purchasing.
New South Wales: NSW has the most investor-friendly general threshold in Australia at approximately $1,075,000, with a general rate of $100 plus 1.6% of land value above that threshold. Many single-property investors pay nothing at all. Source: Revenue NSW.
Victoria: In 2024, Victoria dramatically reduced its land tax threshold from $300,000 to just $50,000, meaning almost every investment property in Victoria now attracts land tax, even those with modest land values. Victoria has progressive rates up to 2.65%, a separate trust regime, and an absentee owner surcharge. The COVID-19 Debt Temporary Surcharge is built into current rates and runs to 2033. Source: State Revenue Office Victoria.
Queensland: Queensland applies a $600,000 threshold for individual owners, with rates starting at $500 plus 1.0% on the value above $600,000. Company and trust thresholds are lower, at $350,000. Source: Queensland Revenue Office.
Western Australia: WA taxes land above $300,000, with rates up to 2.67%. Perth metropolitan properties also attract the Metropolitan Region Improvement Tax at 0.14% above $300,000. Source: RevenueWA.
South Australia: SA is the only state that adjusts its threshold annually. The 2025-26 threshold is approximately $833,000 per published calculators drawing on RevenueSA data. Always verify the current figure directly with RevenueSA before purchasing.
Tasmania: Tasmania has a $125,000 threshold with a two-bracket rate system. Many investors assume land tax does not apply in Tasmania, but the low threshold means it often does. Source: SRO Tasmania.
ACT: The ACT is unique: no threshold, a fixed annual charge, and quarterly assessments. Almost all investment properties in the ACT attract land tax, regardless of value. Source: ACT Revenue Office.
Northern Territory: The Northern Territory is the only jurisdiction that does not levy land tax.
Where the differences bite hardest
The gap between states is not trivial. The same $500,000 of taxable land produces $0 in NSW, QLD, SA, and NT; around $1,950 in Victoria; roughly $2,775 in Tasmania; and $6,000-plus in the ACT. Over 10 years, that is a $60,000 difference on identical land value.
Ownership structure also matters significantly. Most states apply lower thresholds, or no threshold at all, to land held through trusts and companies, and may apply a trust surcharge of 0.4% to 2% on top of the headline rate. In Victoria, properties held in a trust face higher rates with a lower threshold of $25,000. This is something to discuss with a solicitor and accountant well before you decide on a structure.
Foreign and absentee owners face additional surcharges. NSW, VIC, QLD, ACT, and TAS all charge a foreign owner land tax surcharge of 1.5% to 4% on top of standard land tax.
Finally, land tax rules change frequently, especially Victoria's ongoing COVID Debt Plan adjustments and NSW's rule changes. A threshold that makes a property financially viable today may shift within a few years.
A worked example: two investors, same land value
To illustrate the difference, consider two investors who each hold an investment property with a taxable land value of $500,000 in the 2025-26 year.
Investor A holds in NSW. The land value sits well below the $1,075,000 threshold. Annual land tax bill: $0.
Investor B holds in Victoria. The value of $500,000 sits well above the $50,000 threshold. Annual land tax bill: approximately $1,950 based on published calculators drawing on SRO Victoria rates (propertytaxtools.com.au).
Over a 10-year hold, Investor B pays roughly $19,500 more in land tax alone, before accounting for any rate increases or changes to the COVID debt surcharge. Neither investor's outcome is "bad"; the point is that the cost needs to be in the model from day one, not discovered after settlement.
There is one offset worth knowing about. The ATO considers land tax a recurring expense incurred in the process of earning rental income. You can claim a deduction for the amount of land tax paid during the financial year for your investment property, which directly reduces your taxable income and can improve overall cash flow. Your tax agent can help you apply this correctly in your return.
What to factor in before you buy
Land tax is best modelled before exchange, not after. Here are three practical steps:
- Get the unimproved land value for the specific property. The listing price is irrelevant; the Valuer-General's figure is what determines your bill. Ask the selling agent or search your state revenue office's public register.
- Add your existing holdings in the same state. If you already own investment land in that state, the values are aggregated. A property that sits below the threshold on its own may push your combined total above it.
- Talk through ownership structure with a solicitor and registered tax agent before you sign. The structure you use, individual, joint, company, or trust, affects both your entry threshold and the rate bracket that applies. This conversation is most useful before contracts are exchanged, not after.
For a broader look at how investment property costs fit together, visit /services or book a call at elitewealthcreators.com/booking to talk through how we coordinate the property search and finance process.
General information only, not personal financial advice. Speak with a licensed adviser before acting.