What is Land Tax? & When do i need to pay it?
Here we will take a look at the basics of land tax to give you an understanding of "if" & "when" you will need to pay it.
Unlike stamp duty which is a once off tax you pay on the purchase of a property, land tax is a fee you will need to pay EVERY YEAR. So it can be quite a hefty burden on your portfolio. When thinking of your next investment, it pays to know if you will be hit with an extra tax bill each year on your properties, as it can seriously impact your projected cash flow.
Land tax is generally payable for land values above the land tax threshold, although some states will have a flat rate. It is calculated based on the value of the land (not property value) on a specific calendar date (dates vary from state to state). The state revenue office will use the councils 'site value' (normally recorded on council rates notice) to determine the taxable land value of each property. Note: it also includes commercial properties.
In most states an exemption will apply to your own home (owner occupied) and land used for primary production (farming).
Land Tax Thresholds Per State
NSW
$0 - $628,999 = $0
$629,000 - $3,846,000 = $100 + 1.6% of value above $629,000
$3,846,000 and above = $51,572 + 2% of value above $3,846,000
VIC
$0 - $250,000 = $0
$250,000 - $599,000 = $275 + 0.2% of value above $250,000
$600,000 - $1mill = $975 + 0.5% of value above $600,000
$1mill - $1.8mill = $2,975 + 0.8% of value above $1mill
$1.8mill - $3mill = $9,375 + 1.3% of value above $1.8mill
$3mill and above = $24,975 + 2.25% of value above $3mill
QLD
$0 - $599,000 = $0
$600,000 - $999,999 = $500 + 1 cent for each $1 above $600,000
$1mill - $2,999,999 = $4,500 + 1.65 cents for each $1 above $1mill
$3mill - $4,999,999 = $37,500 + 1.25 cents for each $1 above $3mill
$5mill and above = $62,500 + 1.75 cents for each $1 above $5mill
TAS
$0 - $24,999 = $0
$25,000 - $349,999 = $50 + 0.55% of value above $25,000
$350,000 and above = $1,837.50 + 1.5% of value above $350,000
ACT (residential)
$0 - $150,000 = $765 + 0.296% of value
$150,001 - $300,000 = $765 + 0.4088% of value
$300,001 - $450,000 = $765 + 0.513% of value
$450,001 - $600,000 = $765 + 0.5603% of value
$600,001 and above = $765 + 0.6013% of value
SA
$0 - $300,000 = $0
$300,001 - $550,000 = 50 cents for every $100 above $300,000
$550,001 - $800,000 = $1,250 + $1.65 for every $100 above $550,000
$800,001 - $1mill = $5,375 + $2.40 for every $100 above $800,000
$1mill and above = $10,175 + $3.70 for every $100 above $1mill
WA
$0 - $300,000 = $0
$300,001 - $420,000 = $300
$420,001 - $1mill = $300 + 0.25 cents for each $1 above $420,000
$1mill - $1.8mill = $1,750 + 0.90 cents for each $1 above $1mill
$1.8mill - $5mill = $8,950 + 1.8 cents for each $1 above $1.8mill
$5mill - $11mill = $66,550 + 2 cents for each $1 above $5mill
$11mill and above = $186,550 + 2.67 cents for each $1 above $11mill
NT
No land tax in Northern Territory
Land tax should not solely alter your decision to buy an investment property, as land values can go up and you can end up heading towards land tax thresholds anyway. Either way, as you have probably come to understand, we believe the smartest thing to do is to acquire a diversified portfolio. Although if you are coming close to land tax thresholds, there are ways to avoid being charged a higher levy buy purchasing in different entities.
We recommend researching the appropriate state revenue office to check your possible land tax levies before any assessments.
For some more information on each states land tax, see below:
If there is anything else you wish to know about land tax, then please feel free to contact us.
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