Whether you’re new to property investment in Australia or have a growing portfolio, land tax is one of the most confusing (and often overlooked) costs. With each state having its own set of rules, rates, and thresholds, it’s no wonder many investors—local and overseas alike—find land tax overwhelming.
And in 2025, the rules have shifted again—particularly in Victoria, where additional surcharges continue to place upward pressure on holding costs.
At Boa & Co. Chartered Accountants, we help clients make sense of land tax across Australia. In this article, we break down how land tax works, where it applies, and what’s new in 2025—so you can make smarter, tax-informed investment decisions.
What Is Land Tax?
Land tax is an annual state-based tax applied to the unimproved value of land you own, excluding your main residence (your home). Generally, it applies to:
- Investment properties
- Holiday homes
- Vacant land
- Commercial and industrial properties
It does not apply to:
- Your principal place of residence (PPR)
- Certain primary production land
- Land owned by charitable organisations
- Some retirement or aged care properties (varies by state)
How Is Land Tax Calculated?
Each state and territory has its own land tax thresholds, tax rates, and taxing dates. But here’s the general method:
- Land Value Assessment: The Valuer-General in your state assesses your land’s value (excluding buildings).
- Apply Tax Rates: Most states use progressive rates—the more your land is worth, the higher the percentage you pay.
- Thresholds & Exemptions: Tax-free thresholds mean you don’t pay land tax unless your land value exceeds a certain amount.
Land tax applies to your combined taxable landholdings in each state, not across the whole country. This is why structuring and diversification are key in land tax planning.
Land Tax in Each State (2025 Update)
Victoria (VIC)
- Tax-free threshold: $50,000
- Top rate: Up to 2.65%, plus surcharges
- Surcharges:
- Absentee owner surcharge: 4%
- Vacant residential land tax: Expanded to apply statewide in 2025
- COVID-19 debt levy: Continues to apply to higher-value land
- Absentee owner surcharge: 4%
- Taxing date: 31 December
➡ Victoria remains the most aggressive in its land tax regime. Strategic planning is essential for VIC-based investors.
New South Wales (NSW)
- Tax-free threshold: $1,140,000 (2025 indexed)
- Top rate: 2% for land above $6.85 million
- Land tax reform: No move to annual property tax (reform shelved)
- Taxing date: 31 December
Queensland (QLD)
- Tax-free threshold: $600,000 (individuals), $350,000 (companies/trusts)
- Top rate: 2.75%
- Surcharge: 2% absentee landowner surcharge
- Taxing date: 30 June
Note: QLD’s controversial “interstate land ownership aggregation” policy was scrapped, so only QLD land is now assessed for QLD land tax.
South Australia (SA)
- Tax-free threshold: $699,000 (2025 indexed)
- Top rate: 2.4% for land above $2.6 million
- Trust surcharge: Yes
- Taxing date: 30 June
Western Australia (WA)
- Tax-free threshold: $300,000
- Top rate: 2.67%
- Foreign owner surcharge: 7% on top of duty, not land tax
- Taxing date: 30 June
Tasmania (TAS)
- Tax-free threshold: $100,000
- Top rate: 1.5% for land over $500,000
- Taxing date: 30 June
Australian Capital Territory (ACT)
- No tax-free threshold
- Progressive rates: Starting at 0.54%, rising to 1.14%
- Quarterly assessments (tax is paid in 4 instalments)
- Applies to all residential investment properties
Northern Territory (NT)
- No land tax (still the only jurisdiction without it)
Why Land Tax Matters in 2025
Many investors underestimate how land tax affects overall returns. As property values increase and thresholds remain unchanged or rise slowly, more investors are falling into the land tax net.
In some states, holding costs from land tax can now exceed rental yields—especially in VIC and NSW. This means that smart structuring and planning are critical.
Smart Planning Tips
At Boa & Co., we help clients stay ahead of these costs with strategic planning:
- Structure wisely: Consider using trusts or entities to distribute ownership and reduce exposure.
- Diversify across states: Holding property in different jurisdictions can help avoid double thresholds.
- Review annually: Land valuations and policies change every year. Stay informed and adjust strategies regularly.
- Pre-purchase checks: Always request a clearance certificate when buying. It shows whether any unpaid land tax is attached to the property.
Before You Buy: Estimate Your Land Tax
Each state has its own calculator to help you estimate your land tax liability before purchasing. We can assist you in reviewing these figures as part of your property tax planning.
Need Help Navigating Land Tax? Speak With Us.
Whether you’re considering your first investment or expanding your portfolio across multiple states, land tax should be part of your financial strategy—not an afterthought. The tax landscape is shifting, and with surcharges, thresholds, and exemptions constantly changing, it’s more important than ever to work with an experienced advisor.
At Boa & Co. Chartered Accountants, we specialise in helping investors—from locals to overseas buyers—plan smarter, structure better, and save more when it comes to property tax.
If you’re unsure how land tax affects your current properties or potential purchases, speak to us today. Call us on 1300 952 286, email [email protected], or visit www.boanco.com.au to book your personalised consultation.