How Much Land Tax on an Investment Property?
Land tax is the hidden cost that catches new property investors off guard. Unlike stamp duty (which you pay once), land tax is an annual bill based on the unimproved value of your land. It varies dramatically by state — the same $500,000 land value costs you nothing in NSW but over $3,000 in Victoria.
Key Facts
Land tax only applies to investment properties, vacant land, and commercial properties. Your home (principal place of residence) is exempt in every state. The Northern Territory has no land tax at all. In all other states, there's a tax-free threshold — you pay nothing until your total land value exceeds a certain amount.
State-by-State Overview
NSW: Tax-free threshold of $1,075,000. Above that, you pay $100 plus 1.6% of the value over the threshold. Generous for single-property investors but adds up fast with multiple properties.
Victoria: Tax-free threshold of $300,000. Rates from 0.2% to 1.25% as land value increases. Victoria has the lowest threshold of any state, meaning investors pay land tax on cheaper properties.
Queensland: Tax-free threshold of $600,000. Rates from 1% to 2.25%. Queensland also has a controversial interstate land tax regime that considers your total Australian land holdings.
Western Australia: Tax-free threshold of $300,000. Rates from 0.25% to 0.9%. Relatively low rates compared to eastern states.
South Australia: Tax-free threshold of $450,000. Rates from 0.5% to 2.4%. Progressive scale with many brackets.
Tasmania: Tax-free threshold of $100,000. Flat rate of approximately 1.5% above that. The lowest threshold after Victoria.
ACT: No tax-free threshold — every property owner pays. Rates start at 0.54%. The ACT is transitioning from stamp duty to land tax over 20 years.
Northern Territory: No land tax. One of the key advantages of investing in the NT.
Calculate Your Land Tax →The Impact on Your Investment
Land tax is a deductible expense against your rental income, so it reduces your taxable income. But it's still real money out of your pocket. On a $500,000 land value in Victoria, you're paying roughly $2,600/year. Factor this into your rental yield calculations and negative gearing analysis before you buy.