Land tax
An annual state tax on the value of land you own above a threshold, excluding your main residence.
Land tax is levied by each state and territory on the unimproved value of land — the dirt, not the building. Your main residence is generally exempt, so it mainly affects investors and landholders.
Each state sets its own threshold, rates and exemptions, and they differ substantially. Holdings are aggregated within a state, so several modest properties in one state can attract more tax than a single larger one.
Because the tax is assessed on land value rather than what you paid, rising land values can increase your bill sharply even when rent has not moved. It is one of the more frequently underestimated holding costs.
Why it surprises investors
Two investment units in the same state are aggregated for land tax purposes. Individually each might sit under the threshold, but combined they exceed it and attract an annual bill.
The bit people get wrong
Buying across different states can reduce land tax because thresholds apply per state rather than nationally. Concentrating a portfolio in one state is often the more expensive structure.
Common questions
Is land tax deductible?
Yes, land tax on an income-producing property is deductible against rental income in the year it is incurred.
Does my home attract land tax?
Generally no. A principal place of residence exemption applies in every state, though very high value land can still attract tax in some jurisdictions.
Do foreign owners pay more?
Yes. Most states apply an absentee or foreign owner surcharge on top of ordinary land tax, sometimes at several times the standard rate.
Run your own numbers