As the name implies, land tax is a tax on the value of land that is based on the total value of all unimproved land that you own, excluding your principal place of residence (PPR). In Australia, the rate of land tax varies from state to state (eg. In the Northern Territory there is no land tax). Each state or territory government has its own tax rate as well as specific exemptions.
That is why it is essential to know the laws and regulations related to land tax that cover the state (or potentially states – if you’re an investor with property in multiple states) you’re in.
So which state imposes the most expensive land tax in Australia?
In Queensland, land tax is calculated on the total taxable value of the freehold land that you own on June 30 each year (excluding your PPR). Rates vary depending on the total value of the land as well as the type of owner that you are. As an individual, you are liable when the total taxable value of your land is $600,000 or more. Companies, trustees or absentees are liable when the land to be taxed is worth $350,000 or more. The liability may also change when certain events occur and a reassessment of your land tax is necessary.
In Victoria, your bills for 2017 and 2018 will be based on the 2016 council site valuation. Land tax is assessed using the appropriate rate and the total site value of your land holdings. You are required to pay land tax when the total value of your property as of midnight on December 31 is equal to or more than $250,000, or $25,000 for trustees.
Land values in NSW are determined as at July 1, preceding each land tax year. To calculate land tax for 2018, the threshold is $629,000, with a rate of $100 plus 1.6% up to the premium threshold. Speaking of the premium threshold, it is $3,846,000 with a rate of $51,572 for the first $3,846,000 then 2% over that.
Land tax is calculated by applying the appropriate tax rate to land owned on June 30.
|Aggregated Taxable Value of Land||Land Tax Rate|
|$0 – $300,000||Nil|
|$300,001 – $420,000||Flat rate of $300|
|$420,000 – $1,000,000||$300 + 0.25 cent for each $1 in excess of $420,000|
|$1,000,000 – $1,800,000||$1,750 + 0.90 cent for each $1 in excess of $1,000,000|
|$1,800,000 – $5,000,000||$8,950 + 1.80 cents for each $1 in excess of $1,800,000|
|$5,000,000 – $11,000,000||$66,550 + 2.00 cents for each $1 in excess of $5,000,000|
|$11,000,000||$186,550 + 2.67 cents for each $1 in excess of $11,000,000|
Land tax in Tasmania is assessed as on July 1, using the appropriate tax rate.
|Taxable Value of Land||Land Tax Rate|
|$0 – $24,999||Nil|
|$25,000 – $349,999||$50 plus 0.55% of value above $25,000|
|$350,000 and above||$1,837.50 plus 1.5% of value above $350,000|
In the ACT, land tax is computed based on a fixed charge, which is $1,145, and a valuation charge, which is determined using a formula based on the property value.
Do you have ideas on land tax and how to use the land tax calculator? Share your insights in the comments section.