Land Tax in Australia Explained: What Every Property Investor Needs to Know in 2026

What Is Land Tax?

Land tax is an annual state-based tax charged on the value of land you own above a set threshold, excluding your principal place of residence (your home).

A few key things to understand:

• It's calculated on the unimproved land value, not the total property value (so the building itself isn't included)
• It applies to investment properties, vacant land, and holiday homes
• Your owner-occupied home is exempt
• It applies regardless of your income, even if you're not earning rent, you still owe it
• Thresholds and rates vary significantly by state

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Land Tax Thresholds by State (2026)

Each state sets its own thresholds and rates, which is exactly why diversifying your portfolio across states is such a powerful strategy.

New South Wales

• General threshold: $1.075 million (land value)
• Rate above threshold: $100 + 1.6% of land value above the threshold
• Premium threshold: $6.571 million, $88,036 + 2% above this amount
• Land tax is assessed annually on 31 December, no pro-rata calculations apply

Victoria

• Threshold: $50,000 (one of the lowest in the country)
• Rates increase progressively from $500 at the lowest tier up to 2.65% for holdings over $3 million
• Victoria also introduced a temporary Covid Debt Levy in recent years, which significantly increased bills for many investors, a reminder of how quickly state rules can change

Queensland

• Individual threshold: $600,000
• Rate above threshold: $500 + 1% for each dollar above $600,000, increasing on a tiered basis above $1 million
• Companies and trusts: Lower or no threshold applies, important to factor in if you're purchasing under a different structure

South Australia

• Threshold: $732,000
• Progressive rates apply above this amount

Western Australia

• Threshold: $300,000
• Progressive rates apply above this amount

Tasmania

• Threshold: approximately $125,000

ACT

• Structured differently with a flat charge of approximately $1,612 regardless of land value, with an additional variable charge based on average unimproved value

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Why Diversifying Across States Is One of the Best Tax Strategies

Here's a real-world example of why this matters:

Say you build a $5 million portfolio with all properties in Victoria. With Victoria's low $50,000 threshold, you could easily be paying $50,000 to $60,000+ per year in land tax.

Now spread that same portfolio across three or four states, Queensland, NSW, WA, and Victoria, and your total land tax bill could drop dramatically, because each state's threshold applies separately.

This is one of the core reasons experienced investors don't just buy in their home state. Diversification isn't just about managing market risk, it's about managing tax exposure too.

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Other Taxes Property Investors Need to Know About

Land tax isn't the only cost to plan for. Here's a quick overview of the other key taxes that affect investment property owners in Australia:

Stamp Duty (Transfer Duty)

• A one-off tax paid when you purchase a property
• Rates vary by state and purchase price, and can be significant (Victoria has the highest rates in the country)

Capital Gains Tax (CGT)

• Applies when you sell an investment property for a profit
• Held for more than 12 months? You may be eligible for a 50% CGT discount
• CGT is calculated on the profit (sale price minus cost base), not the full sale price

Income Tax on Rental Income

• Rental income is assessable income and taxed at your marginal rate
• This can be offset through deductions including interest, depreciation, property management fees, and maintenance costs

Negative Gearing

• If your investment property expenses exceed rental income, the loss can be offset against your other income, reducing your overall tax bill
• A common and legal strategy used by Australian property investors

Depreciation

• Not technically a tax, but a powerful tax deduction
• You can claim depreciation on the building structure and fittings, often generating thousands in annual deductions

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Does High Land Tax Mean You Should Avoid a State?

Not necessarily.

A property in Victoria that grows at 2% more per year than a comparable property in another state will likely outperform, even after accounting for the higher land tax bill.

The key questions to ask are:

• What is the property's likely growth trajectory?
• What are the total holding costs including land tax?
• Does the net return (after all costs) still make strategic sense?

At Search Property, our research team analyses exactly this. Growth potential, cash flow, tax exposure, and portfolio structure, so you're making data-driven decisions, not emotional ones.

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What Smart Investors Do Differently

The investors who build large, successful portfolios in Australia don't ignore tax, they plan around it from the start.

Here's what that looks like in practice:

• Diversify across states to stay below or near individual state thresholds
• Buy for growth first - a high-growth asset will outperform the drag of land tax over time
• Work with specialist accountants who understand property structures and depreciation
• Review your portfolio annually - land values and thresholds change, and your strategy should too
• Consider structure carefully - purchasing in a trust or company can affect thresholds (often negatively), so get advice before you buy

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Ready to Make Data-Driven Investment Decisions?

At Search Property, we help investors identify markets and property types that align with long-term wealth goals. Our 12.21% average growth rate in 2025 outperformed the national average for the sixth consecutive year, and we did it by focusing on fundamentals, not trends.

Book a FREE investment assessment with Search Property. We'll discuss your budget, goals, and strategy to ensure you're investing in assets that actually build wealth.