Land Tax by State for Investment Property

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 jurisdiction. Thresholds range from $50,000 in Victoria to $1,075,000 in NSW. Victoria’s COVID-era surcharge is now confirmed legislated through to 30 June 2033 after the May 2026 state budget. NSW has frozen its thresholds permanently from 1 January 2025, meaning bracket creep is now a structural cost for NSW investors. And the Northern Territory still doesn’t levy land tax at all.

A state-by-state breakdown of where the money actually goes.

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

NSW: the most generous threshold, but frozen

NSW has the highest tax-free threshold at $1,075,000. 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.

Here’s the catch most investors miss: from 1 January 2025, Revenue NSW permanently froze both thresholds. There’s no annual indexation. Every year of land-value growth (Sydney has averaged 6-7% historically) pushes more of your portfolio above the line without the threshold moving to catch up. Over a ten-year hold that bracket creep is now a structural cost for NSW investors, not a one-off.

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 today. It’s property three or four where NSW land tax starts to bite, and the frozen threshold means that day arrives faster than it did pre-2025.

Victoria: the most expensive state by a wide margin

Victoria sits at the punishing end of the spectrum. The threshold is just $50,000, which means almost every investment property in the state triggers land tax from day one. There’s no grace period, no meaningful general exemption.

On top of the standard rates, the COVID-19 Debt Temporary Surcharge introduced in 2024 adds a $975 fixed fee plus an additional 0.10% on land values above $300,000. The May 2026 Victorian budget confirmed this surcharge is now locked in to 30 June 2033, with no early end date. For absentee owners (non-Australian residents), a further 4% surcharge applies. Properties held in trusts also face an extra trust surcharge.

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).

It’s a significant reason why a reported 24,000+ rental properties were withdrawn from the Victorian market through the 2024-25 changes. The annual holding cost increase pushed some investors into outright negative territory. For investors entering Victoria now, factor land tax into your cash flow modelling from day one. It isn’t a surprise cost, but it’s one that interstate buyers consistently underestimate.

Queensland: balanced threshold, big trust trap

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 structural 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 than the individual numbers suggest. Discuss the structuring implications with your accountant before settling.

And the rule that didn’t happen: in 2022 the QLD government walked back a proposal to aggregate interstate land values into your QLD assessment. That reform was shelved, so today your NSW or VIC land holdings don’t get folded into your QLD calculation. Worth knowing because it still gets quoted as if it’s law.

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 nothing like the cost shock 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.

One add-on Perth investors miss: the Metropolitan Region Improvement Tax (MRIT) is a separate 0.14% levy on the same metro land above $300,000. It funds urban planning, sits on top of the standard land tax bill, and it’s the only state with a parallel charge of its kind. The 2026-27 WA state budget (handed down May 2026) left land tax thresholds untouched, with all the housing-tax relief targeted at first-home buyer stamp duty instead.

South Australia: high threshold, indexed annually

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.

Unlike NSW’s frozen threshold, SA indexes its thresholds annually based on the Valuer-General’s land value movement. The 2026-27 figure is gazetted in late June each year and usually nudges upward with land values, which softens bracket creep over time. 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 0.45% above the threshold and stepping up to 1.5% above $500,000 in land value.

The ACT has no tax-free threshold. Every investment property pays land tax, calculated as a fixed charge ($1,693 in 2025-26, with the 2026-27 figure being updated for the new financial year) 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. Holding for ten years in the ACT effectively shifts the cost from purchase to occupation.

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. That doesn’t make NT a default buy, but for portfolio holders already concentrated in higher-tax states, a strategic Darwin or Alice Springs purchase can pull the average land tax bill down.

The multi-state portfolio advantage

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. The same $800,000 of land value concentrated in QLD pushes you $200,000 over the threshold and costs 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. Spreading states is easier with someone who buys nationally; here’s whether a buyers agent is worth it.

It isn’t the only reason to spread geographically, but it’s a meaningful one that compounds as the portfolio grows. Our land tax calculator lets you model the difference between the two paths on your specific land values.

Worked example: where to buy property four

Take a client with three properties already held: one in Sydney (land value $480,000), one in Brisbane (land value $410,000), and one in Adelaide (land value $290,000). All three sit below their respective thresholds today, so the annual land tax bill is zero.

Now you want to add a fourth investment property with a $400,000 land value. Where it lands matters more than most investors realise:

• Add it in NSW: combined NSW land $880,000, still under the frozen $1.075M threshold. Land tax stays at zero, but the frozen threshold means another $200k of growth in the next 5 years tips you over.
• Add it in QLD: combined QLD land $810,000, $210,000 over the individual threshold. First year land tax roughly $2,200.
• Add it in SA: combined SA land $690,000, still under the $833,000 threshold. Land tax stays at zero, with the SA indexation softening any future creep.
• Add it in VIC: that $400,000 alone triggers around $2,000 a year in combined land tax and COVID surcharge from day one. No threshold protection at all.

Same property value, same yield, four very different ongoing cost structures. This is where the decision on which state to buy in stops being a market view and starts being a portfolio engineering decision.

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.

Thresholds and rates verified against state revenue offices, 2026-27 budget papers, and 2026-27 Big-4 tax alerts. Last fact-checked 24 June 2026. SA and ACT FY27 figures are gazetted in late June; check the relevant state revenue office for the latest published number before relying on them.

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.

See how we build multi-state portfolios for investors.

If you’re building a multi-state portfolio and want to understand how land tax affects your strategy, book a free discovery call.