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Ins and Outs of Land Tax
18 February 2017
Sydney property market soaring! Melbourne home prices skyrocket! While these are great headlines for existing investors in these markets, the downside to increasing property values is increasing land values. Land tax is becoming an increasing issue for many of our members, primarily due to significantly increased land values. Like most taxes, it is the privilege you pay for making money!
What is land tax
Land tax is exactly that – tax levied on the owners of land. The principle place of residence is exempt from land tax, but it captures all other land (unless exempt) and is payable each and every year. It is calculated on the improved value of the land and tax is levied according to each States thresholds.
Land tax State by State (for individuals)
NSW
In the simplest system, land value above $549,000 is taxed at $100 +1.6% up to $3,357,000.
Land value from $3,357,000 is taxed at $45,028 + 2% above that.
VIC
In Victoria, you get slugged with land tax as soon as your land holding value exceeds $250,000.
| <$250,000 | Nil |
| $250,000 – $600,000 | $275 + 0.2% over $250K |
| $600,000 – $1,000,000 | $975 + 0.5% over $600K |
| $1,000,000 – $1,800,000 | $2,975 + 0.8% over $1,000K |
| $1,800,000 – $3,000,000 | $9,375 + $1.3% over $1,800K |
| $3,000,000 + | $24,975 + 2.25% over $3,000K |
QLD
In sunny Queensland, land tax starts from $600,000 of land value.
| <$599,000 | Nil |
| $600,000 – $999,999 | $500 + 1 cent for each $1 over $600K |
| $1,000,000 – $2,999,999 | $4,500 + 1.65 cents for each $1 over $1,000K |
| $3,000,000 – $4,999,999 | $37,500 + 1.25 cents for each $1 over $3,000K |
| $5,000,000 + | $62,500 + 1.75cents for each $1 over $5,000K |
WA
WA has the highest threshold of $11,000,000.
| <$300,000 | Nil |
| $300,000 – $420,000 | $300 flat rate |
| $420,000 – $1,000,000 | $300 + 0.25 cents for each $1 over $420K |
| $1,000,000 – $1,800,000 | $1,750 + 0.90 cents for each $1 over $1,000K |
| $1,800,000 – $5,000,000 | $8,950 +1.80 cents for each $1 over $1,800K |
| $5,000,000 – $11,000,000 | $66,550 + 2 cents for each $1 over $5,000K |
| $11,000,000 + | $186,550 + 2,67 cents for each $1 over $11,000K |
TAS
| <$249,999 | Nil |
| $250,000 – $349,999 | $50 + 0.55% over $25,000 |
| $350,000 + | $1,837.50 + 1.50% above $350K |
SA
| <$300,000 | Nil |
| $300,001 – $550,000 | 0.50 cents for every $100 over $300K |
| $550,001 to $800,000 | $1,250 + $1.65 for every $100 over $550K |
| $800,001 to $1,000,000 | $5,375 + $2.40 for each $100 over $800K |
| $1,000,000 + | $10,175 + $3.70 for each $100 over $1,000K |
NT
There is no land tax in NT!
How to minimise land tax
Whilst you can’t necessarily avoid land tax if you have multiple properties, there are ways to reduce your exposure:
- Invest across geographical areas
Hudson have long advocated investing across different states primarily for diversification, but it also serves to minimise land tax.
For example, if you have three investment properties in Victoria, it is highly likely that you will be up for land tax given that the threshold in Vic starts at $250K. However, if you had one investment property each in Victoria, Brisbane and Western Australia, the likelihood is significantly reduced given that the thresholds begin at $250K, $600K and $300K respectively.
- Invest in real estate with smaller land content.
Again, Hudson’s mantra has always been to invest within a 10km radius of major CBD’s, which more often than not means investing in apartments or townhomes that are more affordable and require less maintenance. By default, investing in these types of real estate also means a reduced land content which aids in minimising a land tax bill!
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