Land Tax Guide Australia: Rates, Thresholds and Exemptions by State (2026)

Land tax is one of the most significant ongoing costs for Australian property investors, yet it is frequently overlooked during the buying process. Unlike stamp duty, which is a one-off cost at purchase, land tax is an annual obligation that can amount to thousands or tens of thousands of dollars each year — particularly as land values rise. This guide explains how land tax works in every state, who pays it, the available exemptions, and strategies to minimise your liability.

Land Tax vs Stamp Duty

Stamp duty and land tax are both state government taxes on property, but they work very differently:

• Stamp duty (transfer duty) is a one-off tax paid when you purchase a property. It is based on the purchase price or market value (whichever is higher) and is payable at or shortly after settlement. Use our stamp duty calculator to estimate your liability.
• Land tax is an annual tax based on the unimproved value of land you own as at the assessment date. It is ongoing for as long as you own the land (above the tax-free threshold) and applies to land holdings, not transactions.

Some states (notably the ACT) are gradually transitioning from stamp duty to a broad-based land tax model. This is an evolving policy area, so check with your state revenue office for the latest position.

Who Pays Land Tax?

Land tax applies to individuals, companies, trusts, and self-managed super funds that own land above the tax-free threshold. The key principle is that the total value of all taxable land you own in a state is aggregated — you do not get a separate threshold for each property.

• Investment property owners: Land used for rental or investment purposes is subject to land tax.
• Vacant land owners: Undeveloped land (including land purchased with plans to build) is taxable. Some states impose a higher rate on vacant residential land.
• Holiday home owners: A holiday home that is not your principal place of residence is subject to land tax.
• Commercial and industrial land owners: Land used for business purposes is taxable.
• Companies and trusts: Land owned through companies or trusts is taxable, often at a different (and frequently higher) rate. Trusts in particular face surcharges in several states.

Common Land Tax Exemptions

The most significant exemptions from land tax across all states include:

• Principal place of residence: The home you live in is exempt in all states and territories. This is the most important exemption for most Australians. To qualify, you must occupy the property as your primary home.
• Primary production land: Land used for genuine farming, agriculture, or primary production is generally exempt, though the criteria vary by state. The land must be used for a bona fide primary production business, not just zoned rural.
• Charitable and religious use: Land owned by registered charities and used for charitable purposes, or land used for religious worship, is typically exempt.
• Retirement villages and aged care: Land used for retirement village or aged care purposes is exempt in most states.
• Land below the tax-free threshold: Each state sets a threshold below which no land tax is payable. If the total taxable value of your land in a state falls below this threshold, you pay nothing.

Land Tax Thresholds and Rates by State

The table below summarises the tax-free thresholds, general rates, and foreign owner surcharges for each state and territory. Note that these are the general individual rates — trusts, companies, and absentee owners may face different rates and lower thresholds.

Important: These thresholds and rates change regularly. The figures above are indicative as of early 2026. Always verify current rates with your state revenue office or your accountant before making financial decisions. The NT does not levy land tax, making it the only jurisdiction in Australia without this tax.

How Land Tax Is Calculated

Land tax is calculated on the total unimproved value of all your taxable land in a single state, assessed as at the relevant date (31 December in NSW and QLD; 1 January in VIC; dates vary in other states). Here is a worked example:

Example: NSW Land Tax Calculation

Suppose you own two investment properties in NSW with the following unimproved land values:

• Investment Property 1 (Parramatta): Land value $650,000
• Investment Property 2 (Newcastle): Land value $520,000

Total taxable land value: $1,170,000. The NSW general threshold for 2026 is $1,075,000.

Land tax = $100 + 1.6% of ($1,170,000 - $1,075,000) = $100 + 1.6% of $95,000 = $100 + $1,520 = $1,620 per year.

If you also owned a third investment property with a land value of $400,000, your total taxable value would be $1,570,000, and the tax would be $100 + 1.6% of $495,000 = $100 + $7,920 = $8,020 per year — a significant jump.

Land Tax on Investment Properties

For property investors, land tax is a significant annual cost that directly affects rental yield and investment returns. Key considerations include:

• Tax deductibility: Land tax paid on investment properties is generally tax-deductible as an expense against your rental income.
• Impact on rental yield: When analysing an investment property's return, always include land tax in your expense calculations. A property with a gross rental yield of 4.5% may have a net yield of only 3.0% after land tax, council rates, insurance, maintenance, and management fees. For a full breakdown of these ongoing expenses, see our property holding costs breakdown.
• Capital growth vs land tax: Properties in high-growth areas tend to have rapidly increasing land values, which means increasing land tax bills. This does not negate the investment case, but it must be factored into your cash flow projections.
• Vacant land: If you own vacant land (including land you intend to develop), it is subject to land tax and you have no rental income to offset it. Some states impose additional levies on vacant residential land to discourage land banking.

Trusts and Land Tax Surcharges

Owning property through a trust (family trust, discretionary trust, or unit trust) has significant land tax implications in most states:

• Lower thresholds: In Victoria, the trust threshold is $25,000 compared to $50,000 for individuals. In SA, the trust threshold is $25,000 compared to $450,000 for individuals. In QLD, it is $350,000 for trusts compared to $600,000 for individuals.
• Trust surcharges: Victoria imposes a trust surcharge of 0.375% on all taxable land held by trusts (on top of the general rate), unless the trust nominates beneficiaries. NSW does not impose a specific trust surcharge but applies the general thresholds.
• Nomination of beneficiaries: In some states, a trust can nominate specific beneficiaries to have the trust's land assessed as part of that beneficiary's personal land holdings. This can be beneficial if the beneficiary's personal holdings are below the threshold, effectively accessing a higher threshold. However, it also means the trust's land is aggregated with the beneficiary's personal land.
• Tax planning essential: The interaction between trusts, land tax thresholds, and surcharges is complex and varies significantly by state. Professional tax advice is essential before acquiring investment properties through a trust.

Foreign Owner and Absentee Owner Surcharges

Several states impose additional land tax surcharges on foreign owners and absentee owners:

• NSW: A 4.0% surcharge applies to all taxable land owned by foreign persons (no threshold — the surcharge applies from the first dollar of taxable land value).
• VIC: An absentee owner surcharge of 4.0% applies to land owned by absentee owners (Australian citizens living overseas for more than 6 months, foreign individuals, and foreign companies and trusts).
• QLD: A 2.0% surcharge applies to foreign individuals, companies, and trusts. The surcharge applies to all taxable land regardless of value.
• SA: A 2.0% surcharge applies to foreign owners on all taxable land.
• ACT: A 0.75% surcharge applies to foreign-owned residential land.
• WA, TAS, NT: No foreign owner surcharge as of 2026 (though this may change with future legislation).

These surcharges can be substantial. For example, a foreign owner with $2,000,000 of taxable land in NSW would pay an additional $80,000 per year in surcharges alone, on top of the standard land tax.

How to Minimise Land Tax

Land Tax and Property Contracts

Land tax obligations are relevant at the contract stage. In most states, land tax is adjusted between the buyer and seller at settlement — the vendor pays their share up to settlement day, and the buyer assumes liability from settlement onwards. Your conveyancer or solicitor will handle this adjustment as part of the settlement process.

If you are buying an investment property, factor in the ongoing land tax cost from day one. Ask the vendor or agent about the current land value (which determines the tax) and calculate your expected annual liability before committing. For a comprehensive pre-purchase checklist, see our stamp duty calculator for upfront cost estimates.

Related Guides

• What Is Stamp Duty? — Complete explanation of stamp duty across all Australian states, including exemptions and concessions.
• Stamp Duty Calculator — Calculate your stamp duty liability for any Australian state.
• Property Due Diligence Checklist — The complete checklist for investigating a property before purchase.
• First Home Buyer Guide — Complete guide to buying your first home in Australia, including costs and government incentives.
• Property Investing Guide — Comprehensive guide to building a property portfolio, including how land tax fits into your overall investment strategy.