Land tax is a state and territory government tax levied annually on the total unimproved value of taxable land held by an individual, company, or trust above a threshold. It applies to investment properties — not to an owner’s primary residence (with limited exceptions).
State-by-state thresholds (approximate, check current rates):
– NSW: $1.075M threshold (2025), with a 1.6% rate on the excess and a 2% surcharge on high-value land
– Victoria: $300,000 threshold, with rates escalating from 0.2% to 2.25% depending on total land value
– Queensland: $600,000 threshold, with rates from 1% to 2.75%
– South Australia: $532,000 threshold at 0.5% rising to 2.4%
– Western Australia: $300,000 threshold at 0.25% rising to 2.67%
Why it matters for investors. Land tax accumulates across all properties held within a state. An investor with three properties in Victoria, each on land valued at $200,000, has a combined land value of $600,000 — well above the threshold. As a portfolio grows, land tax becomes a material holding cost that must be modelled into cash flow projections.
Cross-state diversification. Investors who diversify property holdings across multiple states pay land tax separately in each state, effectively resetting the threshold for each jurisdiction. This is one strategic reason for geographic diversification beyond simply spreading market risk.
Land tax is a legitimate investment expense and is tax-deductible against rental income.
