How to minimise land tax
- Property Planning Australia
- Sep 1
- 11 min read
Updated: 6 days ago
This article was originally published in 2021. It has been updated in September 2026 to reflect the significant changes to land tax thresholds, rates and policy that have occurred across Australian states and territories since that time. All figures in this article were correct as at 21 August 2026.
Land tax is a tax imposed by all state and territory governments (except in the Northern Territory, where no land tax is imposed). The tax payable is based on the combined unimproved value of all the land you own.
In other words, it is calculated on what all your land would be worth if it was vacant (without your house).
Land tax is payable on property you own, other than your principal place of residence (PPOR).
There are a few exceptions to this rule and they vary from state to state.
With the large increases in property values over recent years, land tax has become a greater burden for many Australian property investors.
So, how can investors minimise their land tax liability?
The three most common methods are:
There is a lot to land tax, and only so much we can summarise, so let’s examine a high-level view of what this look like in 2026 in Australia.
2026 Land Tax Snapshot: Thresholds, Rates and Surcharges
State/Territory | Tax-free Threshold | Typical rate range (approx.) | Notes |
ACT | $0 | 0.54% – 1.26% | Applies from the first dollar as part of the ACT's phase-out of stamp duty; rates vary by bracket and property type |
Victoria | $50,000 | 0.30% – 2.65% | Rates quoted already include the temporary COVID Debt Levy, running until 30 June 2033, making Victoria one of the highest-cost states for typical portfolios |
Tasmania | $125,000 | 0.45% – 1.50% | Low threshold, but comparatively mild rates mean total land tax is modest for most investors |
Western Australia | $300,000 | 0.25% – 2.67% | Tiered system; moderate progression and generous top threshold before steep rates apply |
Queensland | $600,000 | 1.00% – 2.25% | Assesses only Queensland land; a 2022 proposal to also count interstate holdings was never implemented and has been scrapped |
South Australia | $936,000 | 0.50% – 2.40% | Threshold indexed annually based on site value movements; rates step up progressively as holdings grow beyond the threshold |
New South Wales | $1,075,000 | 1.60% – 2.00% | Frozen since the 2025 land tax year, with a review due by mid-2027; the highest general threshold of any state |
Northern Territory | No land tax | – | Still the only jurisdiction without land tax |
Other Land Tax Surcharges to Know
Beyond the standard thresholds and rates, most jurisdictions layer on one or more surcharges.
Foreign or absentee owner surcharges are the most common
NSW charges 5%, Victoria 4%, Queensland 3%, Tasmania 2%, and the ACT 0.75%, all on top of the standard land tax bill, and usually with no threshold of their own.
South Australia, Western Australia and the Northern Territory currently have no such surcharge on land tax (though several states charge a separate foreign buyer surcharge on stamp duty at purchase, which is a different, one-off tax).
Vacant land surcharges are far less common
Victoria is effectively alone here, with its Vacant Residential Land Tax (VRLT) applying to homes left empty, starting at 1% of the property's capital improved value and escalating to 2% in the second year and 3% in the third, with exemptions for holiday homes used by the owner for at least four weeks a year and for newly built homes still being marketed for sale.
No other state or territory currently runs an equivalent vacant land regime.
A third, often-overlooked category is the trust and company surcharge
Most states apply a lower threshold, a higher rate, or both, to land held in a discretionary or unit trust, which can turn what would be a $0 bill for an individual into a real liability once the property sits inside a trust structure.
Invest interstate
As land tax is calculated on total land owned within one particular state, spreading your investments across multiple states or territories can reduce your total taxable land value exposure.
Example: Imagine you owned one or more properties that had a total land value of $1.2 million.
Scenario 1: If all were in VIC, your annual bill might exceed $6,450, due to the lower threshold and new levy.
Scenario 2: If all were in NSW, land tax would be around $2,100, since most would fall just above the higher NSW threshold.
Scenario 3: If you spread the holdings across NSW, SA, and WA (each under its own threshold) your land tax could be $0 overall.
Scenario 4: If it was all in the NT, you’d still pay $0, as NT does not impose land tax.
Is it worth investing interstate to save on land tax?
Property Managers
Investing interstate might reduce land tax, but you should take into account the ongoing management of property.
It is generally a good idea to put a property manager in place for properties that are not within driving distance and this comes at an additional monthly cost.
It also can take time to find the right property manager to meet your standards. There are varying levels of managers, those that are very caring for the tenant and the property and those that are hands off, which can lead to a turnover of tenants. Turnover of tenants, as well as each month without a tenant paying you rent is costly for you.
Capital growth
Are you buying in a state that might deliver 4% growth per annum over 30 years, or one that could deliver 6%? The difference in capital growth can be as much as $2M, and it compounds over time.
The property market is made up of many different markets, even within the same city, and each state runs on its own economic cycle. At any given point one state may be rising strongly, another plateauing and another yet to move. Understanding where a market sits in that cycle matters as much as the market itself, buying at the peak of a five-year run looks very different to buying at the start of one. Stay across the market by subscribing to our newsletter and following the podcast.
Capital growth vs Cash flow
Land tax strategy doesn't sit in isolation, it needs to work within your broader property plan. Before optimising for tax, it's worth being clear on whether your focus is capital growth, cash flow, or a balance of both, and what you need your numbers to look like after purchase. If you'd like help thinking that through, our property planning team is a good place to start.
Stamp duty and purchase costs
Stamp duty shouldn't drive which state you buy in, but if your purchasing capacity is stretched it's worth factoring in, costs vary meaningfully across states. Our Property Fees Calculator can help you run the numbers before you commit.
Purchase property in a variety of entities
Land tax is allocated to the owner (entity) of the property. Owning properties in different entities can still reduce your liability, but the rules have tightened since we first wrote this blog.
Example: Ben and Anna invest in Queensland, owning four investment properties (land values: $200,000, $150,000, $100,000, and $150,000). Here is what would happen at the entry level of $600,000 in value and how that cost would look as the properties increased in value.
Land Tax Scaling (QLD Example – Individual Owner)
Total Land Value | Approx. Land Tax | Notes |
$600,000 | ~$500 | Just above threshold |
$1,000,000 | ~$4,500 | Noticeable jump |
$1,500,000 | ~$12,750 | Higher marginal rates |
$2,000,000 | ~$21,000 | Steeper growth phase |
Land Tax Scaling (Split Ownership Scenario – QLD)
In contrast, if the ownership was split where one property was owned by Ben, one by Anna, one jointly, and one by the Smith Family Trust:
Total Portfolio Value | Ben (33%) | Anna (25%) | Joint (17%) | Trust (25%) | Approx. Total Land Tax |
$600,000 | $200K | $150K | $100K | $150K | $0 |
$1,000,000 | $333K | $250K | $167K | $250K | $0 |
$1,500,000 | $500K | $375K | $250K | $375K | ~$1,875 |
$2,000,000 | $667K | $500K | $333K | $500K | ~$5,170 |
Is it worth setting up different entities to save on land tax?
It depends on the value of your property and what state you are in.
In 2026:
Trust and company thresholds are lower in most states (for example, Victoria’s is only $25,000 and Queensland is $350,000).
Compliance set-up costs including a trust or company with accounting and legal fees can be significant.
Ongoing maintenance costs including additional tax returns often outweigh small savings, unless your portfolio is large.
Borrowing through a trust or company can be restrictive and come with higher rates.
Holding property in a trust offers asset protection but limits your ability to use negative gearing and carries higher administrative fees.
Buy units instead of houses
Because land tax is based only on the land value, one way to reduce it is by choosing properties with smaller land components.
For instance, in Victoria:
An $800,000 unit might have a land value of around $240,000 (roughly 30% of the purchase price), attracting approximately $975 a year in land tax.
An $800,000 house on a standalone block, where land typically makes up a much larger share of the value, might carry a land value closer to $560,000, pushing the annual land tax bill to around $2,130.
With Victoria’s threshold sitting at just $50,000, both property types attract land tax, but the gap between them shows how much the land component itself drives the bill.
Is it worth buying units instead of houses to save on land tax?
Whether it makes sense depends on your broader goals. Key considerations include:
Are you comfortable with less control over your property and the added cost of annual strata or body corporate fees? In the example above the land tax saving is around $700, and body corporate fees can easily exceed that. Read more about the costs of owning a unit
Will the land tax saving outweigh the long-term capital growth you might be giving up? Houses often deliver stronger capital growth, so this decision should be based on long-term returns, not tax alone.
Is it worthwhile to minimise land tax?
The three methods above are still the most common strategies to reduce land tax. However, land tax is only one small component of investing in property. Consider the trade-offs:
Buying units over houses can cut land tax exposure but might reduce capital growth and add body corporate costs.
Investing interstate can spread your land value across multiple thresholds, but adds property management costs, exposes you to unfamiliar markets, and means weighing stamp duty and purchase costs that vary state to state.
Structuring ownership across entities can reduce land tax, but comes with set-up and ongoing compliance costs, can restrict borrowing, and may limit your ability to use negative gearing against personal income.
Land Tax Basics (2026 edition)
Land tax remains a state-based annual charge on the total unimproved value of land you own, excluding (in most states) your main residence.
Every state does it differently. Thresholds, tiers, rates and trust rules all vary, and with property values where they are, the numbers can add up faster than most investors expect.
If you're trying to work out how land tax fits into your cash flow, that's a conversation our property strategists have every day.
How land values are determined
Each year, the Valuer-General assesses the unimproved value (the land itself, excluding improvements like dwellings). This valuation is often conservative, but it can still be challenged through the states Value General portal or Revenue Office, usually within 30–90 days of the notice. An adjustment in your favour can save thousands.
The friendliest and least friendly land tax states
Victoria was once relatively lenient but is now among the least friendly due to the reduced threshold and levy.
Queensland has become more complicated by counting interstate holdings for investors based outside the state.
NSW offers the highest threshold, making it more forgiving for smaller portfolios. However, it also carries the country's highest median property price, so a larger threshold doesn't necessarily mean lower land tax exposure in dollar terms, once median-priced properties are factored in.
ACT remains unique, applying land tax from the first dollar but moving towards abolishing stamp duty altogether.
NT continues to impose no land tax.
When building your long-term property plan, consider how many properties you aim to hold and in which states. Factoring land tax early helps prevent heavy cash-flow shocks later.
Tax decisions drive investment choices
Tax policy shifts (such as Victoria’s new levy or Queensland’s reforms) show how quickly changes can influence investment behaviour. Heavier land taxes can discourage private investment, which may in turn affect property supply, employment, and even wage growth.
Tax settings also change with the government in power, the state’s fiscal position, and the influence of industry lobbying. In Victoria’s case, concerns have been raised about the sustainability of the state’s land tax reforms. Median house prices have fallen well below their 2024 levels, investor activity has slowed, and it remains to be seen whether the additional revenue from land tax offsets the potential fall in stamp duty receipts, which are based on sale prices and transaction volumes.
The pitfalls of land tax
Some rules can unintentionally penalise homeowners or expats:
In Victoria, buyers of properties subject to an unpaid land-tax bill may still inherit that liability.
Absentee (overseas) owners now face surcharges as high as 4% per year in Victoria and NSW (2% in Queensland).
Trust ownership can trigger lower thresholds and higher rates.
Always understand the consequences before buying through an entity or while residing overseas.
Diversification
Beyond tax benefits, interstate investment adds portfolio diversification, helping balance risks across different markets. Property cycles vary between states, though in 2023–25 most markets rose simultaneously (an uncommon pattern). When conditions diverge again, diversification can moderate downturn risks.
Developing your property strategy
Land tax can have a significant impact on both cash flow and your retirement nest egg. A large land tax bill can tip a tight portfolio into negative cash flow, especially with higher interest rates and insurance costs. However, tax should never be the sole deciding factor. It’s one of many moving parts, alongside capital growth, rental yield, and personal goals.
Has lower land tax helped or hindered property growth? (2026 update)
Recent market data shows that property performance continues to differ across the states, challenging the assumption that low-tax environments automatically mean poor returns.
NT
Median dwelling prices have risen solidly over the past two years, recovering from earlier declines. Growth appears to have plateaued in 2026, suggesting the market may have reached a short-term peak.
WA
A standout performer. Perth and major regional markets have delivered around a 27 % total return in median values over the past few years, making it one of Australia’s strongest growth states despite still-moderate land tax levels.
NSW and VIC
Continue to show long-term resilience, but higher land tax costs (particularly Victoria’s ongoing debt-recovery levy) are beginning to impact investor participation and transaction volumes.
SA and TAS
Stable but slower growth compared with the national average, with higher land-tax rates dampening investor expansion.
The lesson remains: land tax settings are only one factor in long-term outcomes. Low-tax states can perform strongly, and high-tax states can still deliver better capital growth where broader economic and demographic trends support demand.
Summary
In 2026, Victoria is now one of the least forgiving states, while SA and Tasmania remain expensive at higher land values. NSW still offers the most generous threshold for investors starting out, and the NT remains tax-free.
Even small differences in land value ratios can have a significant impact on your annual cash flow. Investors who plan and diversify thoughtfully are best placed to manage these costs. If you'd like to work through what that looks like for your portfolio, contact the team at Property Planning Australia.
General information only. This article is intended as an overview of land tax across Australian states and territories and is not financial, tax or legal advice. Thresholds, rates and policies are subject to change. Please seek licensed financial and tax advice before acting on any of the information in this article.
For more land tax information check out our podcast episodes
We covered the proposed Queensland land tax changes in depth in Episode 213: Exploring How Government Policy Shapes Investor Behaviour. Note that the changes discussed in that episode were ultimately not implemented.
