Land tax is the ongoing cost that catches most first-time investors off guard. Unlike stamp duty (which you pay once at purchase), land tax hits you every year, and it compounds as your portfolio grows. Two properties in the same state can push you over a threshold that triggers thousands in annual tax. The same two properties split across different states might pay nothing.
The rules are different in every state. The thresholds range from $50,000 (Victoria) to $1,075,000 (NSW). Victoria charges an additional COVID-era surcharge that runs until 2033. And the Northern Territory doesn’t charge land tax at all.
Here’s what investors need to know, state by state.
How land tax works for investors
Land tax is calculated on the unimproved land value of your investment properties, not the total property value. A house worth $700,000 might sit on land valued at $400,000 by the Valuer General. It’s that $400,000 figure that determines your land tax.
Your principal place of residence is exempt in every state. But every other property you own counts, including investment properties, vacant land, and holiday houses.
The critical rule for portfolio builders: all your investment properties within one state are aggregated. If you own three properties in NSW with land values of $300,000, $350,000, and $500,000, the total taxable land value is $1,150,000. That pushes you $75,000 over the NSW threshold and triggers land tax on the excess.
This is why we buy across multiple states. Each state has its own threshold. Two properties in different states each get their own tax-free threshold. Two properties in the same state share one.
The state-by-state comparison
| State | Tax-free threshold | First rate above threshold | Top marginal rate |
|---|---|---|---|
| NSW | $1,075,000 | 1.6% | 2.0% (premium) |
| SA | $833,000 | 0.5% | 3.7% |
| QLD | $600,000 | 1.0% | 2.75% |
| WA | $300,000 | 0.25% | 2.67% |
| TAS | $125,000 | 0.55% | 1.5% |
| VIC | $50,000 | Flat $500-$975 | 2.65% + surcharge |
| ACT | No threshold | Fixed $1,693 + rate | 1.28% |
| NT | No land tax | - | - |
Compare land tax across all states for individuals, trusts, SMSFs, and companies.
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For a detailed calculation on your specific properties, use our land tax calculator.
NSW: the most generous threshold
NSW has the highest tax-free threshold at $1,075,000 (2025-26). You can own one or two investment properties without paying any land tax at all, as long as the combined land value stays under that figure. Above the threshold, the rate is 1.6% plus $100. The premium rate of 2.0% kicks in above $6,571,000.
For most investors buying in the $500,000-$800,000 range in western Sydney, the land component is typically $300,000-$500,000. That means your first two properties likely sit under the threshold. It’s property three or four where NSW land tax starts to bite.
Victoria: the most expensive state
Victoria is in a league of its own for land tax on investment property. The threshold is just $50,000, which means virtually every investment property in the state triggers land tax from day one. There’s no grace period, no meaningful exemption.
On top of the standard rates, Victoria imposed a COVID-19 Debt Temporary Surcharge in 2024 that runs through to 2033. This adds a $975 fixed fee plus an additional 0.10% on land values above $300,000. For absentee owners (non-Australian residents), a further 4% surcharge applies. And properties held in trusts face a trust surcharge on top of everything else.
The combined effect: an investment property with a land value of $500,000 in Victoria costs roughly $2,500-$3,000 per year in land tax. The same land value in NSW costs nothing (under the threshold). In QLD, also nothing (under the $600,000 threshold).
This is a significant reason why 24,000+ rental properties were reportedly withdrawn from the Victorian market after the 2024-25 changes. The annual holding cost increase tipped some investors into negative territory. For investors entering VIC now, factor land tax into your cash flow modelling from day one. It’s not a surprise cost, but it is one that many interstate buyers underestimate.
Queensland: balanced threshold
QLD’s individual threshold is $600,000, which is generous enough that most investors with one or two properties in the southern corridor or regional QLD sit comfortably under it. Above the threshold, the rates start at 1.0% and rise progressively to 2.75%.
One important detail: QLD’s threshold for trusts and companies drops to $350,000. If you’re holding QLD investment properties in a family trust, you’ll hit the land tax threshold much sooner. Discuss the structuring implications with your accountant before settling.
Western Australia: low threshold, low rates
WA’s threshold of $300,000 is relatively low, but the starting rate (0.25%) is also very low. The result: land tax on a single investment property in Perth with $300,000-$500,000 land value is typically $500-$1,500 per year. Not negligible, but not the cost shock that Victoria delivers.
WA’s rates rise progressively to a top rate of 2.67% for land values above $11 million, which only affects large portfolio holders or commercial investors.
South Australia: high threshold
SA’s threshold of $833,000 is the second-highest after NSW. For investors buying in the affordable northern and western suburbs of Adelaide (where land values typically sit between $200,000 and $400,000), you could hold two or three properties before crossing the threshold.
Above the threshold, rates start at 0.5% and rise progressively. SA’s land tax is one of the more forgiving systems for investors building a portfolio in one state.
Tasmania and ACT
Tasmania’s threshold is $125,000, low enough that most investment properties trigger some land tax. But the rates are modest, starting at 0.55%.
The ACT has no tax-free threshold. Every investment property pays land tax, calculated as a fixed charge ($1,693 in 2025-26) plus a rate based on the average unimproved value. The flip side: the ACT is phasing out stamp duty over time, so you pay less upfront but more annually.
The Northern Territory does not levy land tax on any property, making it the only jurisdiction with no annual land-based holding cost for investors.
The multi-state portfolio advantage
This is where land tax strategy gets interesting for portfolio builders.
Each state calculates land tax independently. A $400,000 land value in NSW plus a $400,000 land value in QLD means you’re under the threshold in both states and pay zero land tax in either. But $800,000 of land value concentrated in QLD pushes you $200,000 over the threshold, costing roughly $2,000+ per year.
For investors building a portfolio across multiple states, this is a structural advantage. Three properties across three states might pay zero or minimal land tax. Three properties in Victoria could easily cost $5,000-$8,000 per year in combined land tax.
This isn’t the only reason to diversify geographically, but it’s a meaningful one that compounds as the portfolio grows. Our land tax calculator lets you model the difference.
Factor it into your holding costs
Land tax is a deductible expense against your rental income. So the after-tax impact is lower than the headline figure. On a $3,000 annual land tax bill at a 37% marginal rate, the after-tax cost is roughly $1,890. Still real money, but the tax deduction takes some of the sting out.
The key is to model it before you buy, not discover it after. When comparing properties across states, add the annual land tax to your holding cost calculation alongside rates, insurance, management fees, and maintenance. For a full picture of holding costs and tax deductions, speak to a property-focused accountant.
This is general information only and not financial or tax guidance. Land tax thresholds and rates change annually. Confirm all figures with your accountant or the relevant state revenue office before making investment decisions.
If you’re building a multi-state portfolio and want to understand how land tax affects your strategy, book a free discovery call.
