Understanding Land Tax

What is land tax and do you need to pay it if you own a home in Queensland? We’ve broken down how this tax might applies to you. 

One of the expenses you may encounter as a property owner in Australia is land tax. 

This doesn’t apply to every home and it is calculated based on different factors. This article will help you understand if land tax applies to you and your Queensland property. 

What is land tax in Queensland?

Land tax is collected by each state government. In Queensland, it is calculated based on the land an individual or company owns as of midnight on June 30th each year. 

The amount of land tax someone owes will depend on the number of properties owned, the way the properties are used, the total taxable value and whether or not any exemptions apply. 

The good news for individual homeowners who only have one property in their name is that they rarely have to pay land tax. 

Recently, there was a proposal from the Queensland powers that be to calculate tax based on all property owned in Australia, not only Queensland. It would have resulted in land tax jumping significantly for some investors, which could have put further pressure on rental prices. There was also pushback from other state leaders, so the idea was scrapped.  

Do you have to pay land tax? 

There are lots of conditions and exemptions when it comes to land tax. One of the best ways to figure out if you owe land tax in Australia is to use qld.gov.au’s online eligibility tester.

The tool will ask whether your land is on a single ‘parcel’, whether it has a permanent, fixed structure, whether the structure is inhabitable and who the owner is (e.g. an individual, a trust, or a company). 

If the land is only used for residential purposes and if there is no lease on it, it’s likely it will be exempt from land tax. As explained on the Queensland Government website, most Queensland land owners are exempt from land tax because the value of their land is not high enough.

As per the Queensland Government, land tax tends to apply to individuals if the total taxable value of their land, comprising land owned solely and their share in land owned jointly with others, is $600,000 or more.

After this threshold, land is taxed on a sliding scale. For example; 

• $600,000–$999,999 – $500 plus 1 cent for each $1 more than $600,000
• $1,000,000–$2,999,999 – $4,500 plus 1.65 cents for each $1 more than $1,000,000
• $10,000,000 or more – $150,000 plus 2.25 cents for each $1 more than $10,000,000

Your accountant can help you figure out how much land tax you will owe, or you can use the land tax estimator to do some basic calculations. If you realise you will have to pay this tax, you can start putting money aside. Keep in mind that your tax deductions as an investor may help to offset the cost of land tax.  

When it comes to figuring out how much your land is worth, the taxable value of your land is based on your annual land valuation issued by the Valuer-General.

NSW land tax

We’re Queensland focused but it’s worth mentioning what is happening with land tax in NSW at the moment. 

In November, the NSW Government announced that first home buyers will have the option of paying annual land tax instead of stamp duty when they purchase a home worth less than $1.5 million. 

The Premier in NSW stated that this will help first home buyers reduce the time they spend saving for a deposit by two years. 

First home buyers will be able to do their sums to figure out whether they want to pay an ongoing tax or a single stamp duty payment upfront. It will be interesting to see if other states follow suit on this policy. 

Want to know more about land tax and whether it will be included with your property purchase? We can put you in touch with financial professionals who can explain how it all works. 

I hope you enjoy the read.

Matt Lancashire