As the name suggests, land tax is a tax charged by State Governments to land owners who do not use the land as their principal place of residence. It can apply to those with an investment property, a holiday home, or vacant land. In this guide, we’ll break down what land tax is, how it’s calculated, and how to notify the State Revenue Office in your State.
What is Land Tax?
Land tax is a state or territory-based tax levied annually on the unimproved value of land you own as of a specific date (commonly 31 December). It’s separate from council rates and is calculated on the value of the land without any buildings or improvements.
Who Needs to Pay It?
Generally, you may need to pay land tax if:
- You own land that is not your principal place of residence.
- You own investment properties, holiday homes, or vacant land.
- Your total taxable land value exceeds the threshold set by your state or territory.
Each state and territory in Australia has different rules, thresholds, and rates, so it’s important to check the State Revenue Office (SRO) or equivalent authority where the land is located.
How is Land Tax Calculated?
The calculation is usually:
- Determine the taxable land value (based on state government’s annual valuation).
- Apply the land tax threshold — you only pay tax on the portion above the threshold.
- Apply the applicable rate — rates are often progressive, meaning higher values are taxed at higher rates.
For example, in Victoria (2025–26 financial year):
- The general threshold is $50,000. This means that if the value of your land is more than $50,000, and your property is not your principal place of residence, then you will be liable to pay land tax.
- For example, land valued at $600,000, in Victoria, will attract, at a minimum, $2,250 in land tax per annum.
Common Exemptions
You may not have to pay land tax on:
- Your principal place of residence (PPR).
- Primary production land (e.g., farms).
- Certain charitable or public-use land.
Exemptions must usually be applied for, not assumed.
How to File Land Tax
The process varies slightly between states, but typically involves:
1. Register for Land Tax
If your land holdings exceed the threshold or your circumstances change (e.g., moving out of your home), you may need to register with your state’s revenue office.
Where to register:
- VIC: State Revenue Office Victoria (SRO)
- NSW: Revenue NSW
- QLD: Queensland Revenue Office
- …and so on for each jurisdiction.
If your property is in Victoria, your conveyancer will notify the SRO, at the time that you settle the purchase of the property, that the property will be, for example, an investment property. It is important to note that you are not required to lodge any land tax returns. The SRO will send you invoices, normally around January/February, to notify you of how much land tax to pay based off their value of your land which they will ascertain themselves. Therefore, in summary, you do not need to do anything as a landowner. The State Revenue Office will use information provided to it to send you invoices on an annual basis.
2. Receive Your Assessment Notice
Following on from the previous paragraph, once registered, the State Revenue Office will send you an assessment notice annually. This notice outlines:
- The taxable value of your land.
- The amount of tax payable.
- The due date for payment.
3. Check the Valuation
Always review the unimproved land value listed. If you believe it’s too high, you can lodge an objection within the specified time. Note that a property tax accountant can help you with lodging objections.
4. Pay On Time
You can pay in full or, in many states, arrange instalments. Late payment often attracts interest and penalties. You can also contact an accountant Melbourne to help apply for remissions of these penalties.
5. Keep Your Details Updated
If you sell a property, change your address, or your property use changes (e.g., becomes your main residence), notify the State Revenue Office promptly to ensure your assessment is correct.
Tips to Stay Compliant
- Track all land you own across Australia — thresholds usually apply to your total holdings in a state, not per property. A property tax accountant can help you calculate your annual land tax bill for your total landholding.
- Mark important dates (valuation date, payment deadlines).
- Seek professional advice from a property tax accountant, such as Nobel Thomas, if you own property through companies, trusts, or jointly with others — rules can get complex.
- Consider tax planning — in some cases, ownership structure can affect your land tax liability. Again, a qualified accountant Melbourne can help you with planning and structuring to reduce your land tax liability.
If you’re unsure about your land tax obligations or want to explore ways to minimise your liability, speak with a qualified property tax accountant like Nobel Thomas. We’re only a phone call away.
