Land Tax

Published 01 September 2022Updated 24th February 2023

Land Tax

What is Land Tax?

A land tax is a state tax imposed upon land that’s unimproved and above a certain tax value threshold. Land taxes are levied every year and collected by your state’s government.

Also called a site-value rating, a site valuation tax, a split rate tax, and a location value tax, land tax does not take buildings into account.

The rate of land tax is broadly determined by the type of ownership and the total taxable value of your land. There may be exemptions; for example, your place of residence or residential property could be exempt from land tax.

FAQs about Land Tax

Do buyers pay land tax?

If you purchase vacant land or a land that was an investment property for the previous owner, you might have to pay part of the land tax at the time of settlement. The adjusted land value will be calculated by your taxpayer representative.

However, if the land becomes your principal place of residence, you can apply for a refund of the amount you paid as land value.

A land tax will be incurred, calculated, and collected annually on your property whether or not you earn an income from the land. This is a percentage of the total value of land you own - any improvements you have made to the land or any buildings you have built on the land are excluded from the total taxable value.

How is land tax calculated?

Land tax is calculated by adding the appropriate rate of tax to the total taxable value of land.

Here’s what a basic calculation will look like for NSW land tax (single ownership).

For a land value of $1,000,000:

($1,000,000 - $822,000) x 1.6% + $100 = $2,948

If you have more properties that fit the tax requirements, their taxable land value will be added to the taxable value of the land you’re currently looking at.

The formula would then change to include $1,000,000 + total taxable land value of other properties.

It is advisable to do your own research on how land tax is calculated in your state, with useful tools such as the QLD land tax estimator or VIC land tax calculator to give you a clearer picture.

When will I get my assessment notice?

In simple terms, a notice of assessment is a document that states the amount of income tax you owe, the amount of tax refunds you are entitled to, and any other information related to your taxes.

If you file electronically, you will get your notice of assessment after about two weeks you’ve filed your tax returns. However if you paper file your returns, it will take about eight to ten weeks for you to get your notice of assessment.

Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.

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Land Tax

What is Land Tax?

FAQs about Land Tax

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