By Varun Agarwal, co-founder of PropRetire · Published · Law as read · 2 min read
Is land tax deductible on a rental?
Yes, in general. Land tax on land you rent out, or hold available for rent, is a rental expense, claimed in the income year the land tax relates to.
A home you live in is usually exempt from land tax in the first place.
Which year is land tax claimed in?
The income year the land tax liability relates to, not the year you pay it. A bill that arrives late still belongs to that earlier year.
Land tax paid in arrears is claimed by amending that earlier year's return, as the ATO sets out.
Who pays land tax?
Each state taxes the land an owner holds there, added together, on its value without buildings, above a threshold. A home the owner lives in is usually exempt, and the Northern Territory has no land tax.
For a person, the 2026 threshold is $1,075,000 in New South Wales and $50,000 in Victoria. For 2026-27 it is $600,000 in Queensland, $300,000 in Western Australia, $936,000 in South Australia and $125,000 in Tasmania.
The Australian Capital Territory has no threshold and taxes each residential parcel. A trust often gets a lower threshold, or none.
What does it look like in dollars?
In Revenue NSW's example, land values of $1,050,000, $1,100,000 and $1,150,000 for 2024, 2025 and 2026 average to $1,100,000. That is $25,000 over the threshold, and $25,000 at 1.6% plus $100 is $500.
The rental property tax calculator takes land tax in its other costs a year, with the rates, insurance and agent's fees. Landlords living in 2067, Chatswood claimed $18,600 of other rental costs on average in 2023-24, in the ATO's figures.
What happens to land tax when you sell?
The ATO says to declare any land tax adjustment as rental income when you sell. Where the contract adjusts land tax, it shows on the settlement statement. Victoria has stopped this on most sales since 1 January 2024.
Your settlement statement, line by line covers where each adjustment sits.
When can't land tax be claimed?
On vacant land since 1 July 2019, with a few exceptions such as companies. Can you claim interest and rates on vacant land? covers when land stops being vacant.
On a holiday home kept mainly for the owners' own holidays, even in the weeks it is rented. If it is held mainly to earn rent, the claim covers only the days it is rented or genuinely available. That is the ATO's view, for costs from 1 July 2026.
What should I keep?
Each land tax assessment, with the year it is for, the land it covers and the date you paid it, and any amended assessment.
When you sell, the settlement statement's land tax line, if it has one, as that adjustment is rental income.
See it for your own rentals
What the year leaves you, after costs and tax.