Land Tax

Plain-English definition. Land tax is an annual state government tax on the unimproved value of land you own, calculated on the aggregated value of all your taxable holdings in that state. The main residence is exempt in most states.

How it works in Australia. Each state operates its own scheme with different thresholds and rates. NSW: tax-free threshold $1,075,000 (2025), then 1.6% above to a premium threshold of $6,571,000, then 2%. Victoria: threshold $50,000 with marginal rates to 2.55% above $3m. Queensland: threshold $600,000 for individuals. SA, WA, ACT, Tasmania each have their own scales. Trusts often face surcharge rates and lower thresholds. Foreign owners pay surcharge land tax on top. See Revenue NSW land tax and SRO Victoria land tax.

Concrete example. A Sydney investor owns three NSW investment properties with land values of $700k, $500k and $400k — total $1,600,000. Their main residence is excluded. NSW land tax 2025: ($1,600,000 − $1,075,000) × 1.6% + $100 = $8,500 per year. The same investor with the same portfolio split between NSW and Queensland would pay less, because the threshold is applied per state.

Common confusion. People think their main residence is always exempt — true federally for CGT, but in Victoria and the ACT, vacant land or holiday homes used by the owner can still be taxed. Aggregation across all your state holdings is also missed: owning three units each below the threshold doesn't help if their combined land value exceeds it.