Land tax is the holding cost many investors only notice when the first assessment arrives. It is charged by the state or territory where the land sits, it is based on land value rather than rent, and once your holdings in one state pass the threshold it comes back every year.
This guide explains how land tax works on investment property, the current thresholds in each state, and how the deduction works on your 2025-26 and 2026-27 tax returns. Thresholds and rates were checked against each state revenue office and the ATO’s Rental properties guide 2026 on 9 October 2026.
It is written for individual investors, couples and family trusts that hold rental property. If you are still sorting out how land tax differs from your council bill, start with our land tax vs council rates guide.
Key takeaways
- Land tax is a state and territory tax on land value, not an ATO tax. Every state and the ACT charges it; the Northern Territory does not.
- Most states add together all your taxable land in that state before applying the threshold.
- Individual thresholds range from $300,000 in WA to $1,075,000 in NSW, while the ACT charges rented homes from the first dollar.
- Trusts often face far lower thresholds: $25,000 in SA, $350,000 in Queensland and no threshold for special trusts in NSW.
- Land tax on a rental is generally deductible in the income year the liability relates to; a vacant property tax generally is not.
- A land tax adjustment received on sale is rental income, not a smaller expense.
Land tax by state at a glance
| State | Administered by | Threshold for individuals | Key points for investors |
|---|---|---|---|
| NSW | Revenue NSW | $1,075,000 (2025 and 2026 land tax years) | $100 + 1.6% above threshold; no threshold for special trusts; surcharge for foreign persons |
| VIC | State Revenue Office Victoria | See SRO current rates | Absentee owner surcharge and trust rules apply |
| QLD | Queensland Revenue Office | $600,000 | $350,000 for companies and trusts; extra 3% for foreign companies and trustees |
| SA | RevenueSA | $833,000 (2025-26); $936,000 (2026-27) | Trust threshold $25,000 |
| WA | Department of Treasury and Finance | $300,000 | Flat $300 up to $420,000; metropolitan region improvement tax in Perth |
| TAS | State Revenue Office Tasmania | $125,000 | 0.45% above $125,000, then 1.5% above $500,000 |
| ACT | ACT Revenue Office | No threshold | Fixed charge $1,778 from 1 July 2026 plus a rate on average unimproved value |
| NT | – | No land tax | Not charged in the Territory |
Source: Revenue NSW, SRO Victoria, Queensland Revenue Office, RevenueSA, WA Department of Treasury and Finance, SRO Tasmania, ACT Revenue Office, NT Government, checked 9 October 2026.
What is land tax and who charges it?
Land tax is an annual tax on the value of land you own, other than land that is exempt such as your home. It is set and collected by each state and the ACT under their own laws, which is why there is no single national rate.
It is separate from council rates. Your council charges rates for local services; the state charges land tax on your land holdings. Most investors pay both, and both are claimable against rent.
Do you pay land tax on an investment property?
In most cases, yes, once your taxable land in that state passes the threshold. Land that is usually counted includes:
- Rental homes and units, including your share of a jointly owned property.
- Holiday homes that are not your principal place of residence.
- Vacant land held for investment or future building.
- Commercial property such as shops, offices and warehouses.
The main exemption is your principal place of residence. SRO Tasmania, for example, says principal residence land is not subject to land tax or the foreign investor surcharge. Each state sets its own conditions for this exemption, especially if you move out and rent the home, so check the rules on the SRO Tasmania land tax page or your own state’s site.
How is land tax calculated?
Three things drive the bill: the value of the land, the total land you own in that state, and who owns it.
Land value, not property value
Land tax uses the value of the land alone, as set by the state valuer. The house, unit or shop on top is ignored. Your annual valuation notice or land tax assessment shows the figure used.
Aggregation
Most states add up the value of all your taxable land in that state and apply the scale to the total. WA, Queensland and SA all apply their scales to the total taxable value you hold, and SRO Tasmania adds an owner’s assessed values together before calculating the tax. Two modest rentals in one state can therefore cross a threshold that neither would reach alone.
Ownership structure
Individuals, companies and trusts can be assessed on different scales. If you hold property through a company, the land tax position and the company tax return both need planning before you sign the contract.
What are the land tax thresholds in each state for 2026?
Thresholds are reviewed regularly, and some states publish new scales each financial year. RevenueSA is a good example of how much they can move in one year:
| SA total taxable site value | 2025-26 | 2026-27 |
|---|---|---|
| Tax-free threshold (general) | $833,000 | $936,000 |
| First band rate | $0.50 per $100 above $833,000 | $0.50 per $100 above $936,000 |
| Second band starts at | $1,338,000 ($2,525 + $1.00 per $100) | $1,504,000 ($2,840 + $1.00 per $100) |
| Trust threshold | $25,000 | $25,000 |
For the ACT, land tax applies to residential property that is not a principal place of residence, including rented homes. It is charged as a fixed amount ($1,778 from 1 July 2026) plus a marginal rate on the average unimproved value, starting at 0.54% of the first $150,000, according to the ACT Revenue Office.
For Victoria, the State Revenue Office publishes its current scale on its current rates page. We have not quoted Victorian figures here because they should be read from that page directly. For a deeper state-by-state comparison, see our land tax threshold guide.
Is land tax deductible on a rental property?
Yes, generally. The ATO’s Rental properties guide 2026 lists land tax among the expenses you can claim in the year you incur them, alongside council rates, insurance, interest and property agent fees. A few points matter in practice:
- Timing follows the liability. If an assessment arrives late, the deduction goes to the income years the liability relates to, not the year you pay.
- Sale or change of use. Land tax assessed earlier in the year generally does not need to be apportioned if you sell or stop renting later that year.
- Adjustments at settlement. A land tax credit or adjustment you recover on sale is included in rental income.
- Surcharges. A foreign owner surcharge is deductible only to the owner it is imposed on.
- Vacant property taxes. The ATO says a vacant property tax is not generally deductible.
The deduction is worth your marginal tax rate. At the ATO resident tax rates, income between $135,001 and $190,000 is taxed at 37% in both 2025-26 and 2026-27, plus the 2% Medicare levy. Our list of rental property deductions covers the other expenses that sit alongside land tax.
What about foreign and absentee owner surcharges?
Several states charge extra land tax on foreign or absentee owners. Revenue NSW applies surcharge land tax to foreign persons who own residential land, and its general thresholds do not apply to the surcharge. Queensland charges foreign companies and foreign trustees an additional 3% on taxable land valued at $350,000 or more.
The ATO notes the surcharge applies to individual owners, so in a co-owned property it may apply to one owner and not the other. Only the owner who pays it can deduct it.
Worked example: two Sydney rentals in the 2026 land tax year
Priya owns her home and two rental properties in NSW. The land values are $700,000 and $550,000. Her home is exempt.
Aggregated taxable land: $700,000 + $550,000 = $1,250,000.
Amount above the threshold: $1,250,000 – $1,075,000 = $175,000.
NSW land tax: $100 + (1.6% x $175,000) = $100 + $2,800 = $2,900.
Priya’s taxable income is $150,000, so her marginal rate is 37% plus 2% Medicare levy = 39%. Tax saved by the deduction: $2,900 x 39% = $1,131. After-tax cost: $2,900 – $1,131 = $1,769.
For comparison, the same $1,250,000 of land in SA under the 2026-27 scale: ($1,250,000 – $936,000) / $100 x $0.50 = $1,570.
Rule of thumb: Before buying another property, add its land value to everything you already own in that state and run the total through that state’s scale. The marginal land tax on the new purchase is often far higher than its value alone suggests.
Common mistakes with land tax on investment property
- Assuming one national threshold. Each state sets its own scale, and some change every financial year.
- Forgetting aggregation. The threshold applies to your total land in that state, not to each property.
- Buying in a trust without checking land tax. Trust thresholds can be a fraction of the individual threshold.
- Claiming in the year paid. Late assessments are deducted against the income years the liability relates to.
- Netting off settlement adjustments. Land tax recovered from the buyer goes into rental income, not against the expense.
FAQ about land tax on investment property
Do you pay land tax on an investment property in Australia?
Usually, yes, once the total taxable value of the land you own in one state or the ACT passes that jurisdiction’s threshold. Each state and the ACT charges land tax, and the Northern Territory does not. Your own home is generally exempt as your principal place of residence, but rental properties, holiday homes and vacant blocks are usually counted.
Is land tax deductible for a rental property?
Generally, yes. The ATO’s Rental properties guide 2026 lists land tax among the expenses you can claim in the year incurred. The deduction belongs to the income year the land tax liability relates to under state law, not the year you happen to pay. A vacant property tax is generally not deductible, and a surcharge is deductible only to the owner it is imposed on.
What is the land tax threshold in NSW for 2026?
Revenue NSW shows a general threshold of $1,075,000 for the 2025 and 2026 land tax years. Above that, tax is $100 plus 1.6% of the land value over the threshold, rising to $88,036 plus 2% above the premium threshold of $6,571,000. The threshold does not apply to land held in special or discretionary trusts, and foreign persons pay a separate surcharge.
Why do trusts often pay more land tax?
Several states give trusts a much lower threshold than individuals. RevenueSA uses a $25,000 trust threshold compared with $936,000 for general owners in 2026-27. Queensland’s threshold is $350,000 for companies and trusts compared with $600,000 for individuals, and NSW does not apply its threshold to special trusts. Check the structure before you buy, not after.
What happens to land tax when I sell my rental property?
If you receive a land tax credit or adjustment from the buyer at settlement, the ATO says the recovered amount should be included in your rental income for that year. It is not treated as a reduction of the expense. Land tax already assessed earlier in the year of sale generally does not need to be apportioned, because the liability arose while the property was producing income.
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Nanak Accountants can check your land tax assessments against your tax return, claim them in the right year and help you weigh up ownership structures before you buy. See our rental property tax return service, call 1300 626 258 or book a free 15-minute consultation. You can also find our offices on the Nanak Accountants website.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO Rental properties guide 2026, ATO resident tax rates, and the land tax pages of Revenue NSW, SRO Victoria, Queensland Revenue Office, RevenueSA, WA Department of Treasury and Finance, SRO Tasmania, the ACT Revenue Office and the NT Government on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
