Are you a foreign investor in Australian property or an expat looking for investment opportunities? Land tax is an ongoing annual tax that applies to your property investment. As a property owner, you’re legally required to pay land tax to stay compliant with Australian tax regulations.
Let’s explore what land tax is, how much you need to pay, the additional surcharge for foreign owners, and more to maximise your investment returns.
Land tax is an annual tax charged on the total value of land you own that surpasses a specified threshold. The exact threshold and tax rates vary between states and territories.
Some of the properties that land tax applies to include:
- Properties you purchase for investment purposes.
- A holiday home (can be in Australia if you’re an expat).
- A piece of vacant land that you own.
- An industrial unit.
- Any land that you lease from the Australian government.
- Jointly owned land
Foreign owners may face additional surcharges, with rates depending on the state.
Who Needs to Pay Land Tax in Australia?
You generally need to pay land tax if you own land, such as residential property, such as investment properties, holiday homes, or vacant land. Australian residents may qualify for a main residence exemption. However, non-residents, and foreign owners are typically subject to land tax.
Who Is a Foreign Owner?
A foreign owner of an investment property in Australia is a person who is not an Australian or permanent resident. This includes individuals, corporations, trusts, and foreign governments.
Do Foreigners Pay Land Tax in Australia?
Yes, as a foreign investor or non-resident, you’re liable for land tax in all states and territories except the Northern Territory.
What Are the Land Tax Thresholds?
The land tax thresholds vary across Australian states and territories. Here’s a general overview of thresholds for various states in 2025-26.
- New South Wales (NSW): $1,075,000
- Victoria (VIC): $50,000
- Queensland (QLD): $600,000 for individuals; $350,000 for companies and trusts
- South Australia (SA): $833,000
- Western Australia (WA): $300,000
- Tasmania (TAS): $125,000
- Northern Territory (NT): It doesn’t have any land tax.
If your investment property exceeds these thresholds, you must pay land tax. It’s best to consult the relevant state revenue office for the most accurate and up-to-date information.
What Is Foreign Owner Surcharge?
The Foreign Owner Surcharge is an additional tax imposed on foreign owners of residential property in Australia. It is in addition to the standard land tax and varies by state and territory.
- New South Wales (NSW): An additional 4% applies to all residential land owned by foreign persons and PR visa holders generally living overseas. The tax-free threshold does not apply to the foreign owner surcharge.
- Victoria (VIC): An additional 4% applies to all land owned by absentee owners, including foreign persons.
- Queensland (QLD): An additional 3% applies to all taxable land owned by absentee individuals, foreign corporations, and foreign trustees.
- South Australia (SA): No additional surcharge applies.
- Western Australia (WA): No additional surcharge applies.
- Tasmania (TAS): An additional 2% applies to all residential land owned by foreign persons.
- Northern Territory (NT): It has no land tax or surcharge.
The specific rate and threshold for the surcharge can change over time.
What is the Absentee Owner Surcharge?
An absentee owner is an individual or entity that owns a property but does not reside in or actively manage it. The Absentee Owner Surcharge is an additional tax imposed on foreign owners of residential property in Victoria, Australia. It’s designed to discourage foreign investment in residential property and make housing more affordable for residents.
From 2024 onwards, an additional 4% surcharge applies to land tax for absentee owners of Victorian land. This surcharge was previously 2% (2020-2023), 1.5% (2017-2019), and 0.5% (2016).
This surcharge is added to the standard land tax and trust surcharge rates. To avoid penalties, it’s crucial to declare your status as an absentee owner.
If you own Victorian land and are not a resident on December 13, you’ll likely owe an additional surcharge on top of your standard land tax. This surcharge is calculated based on the total value of your land and applies to various ownership structures. However, it doesn’t apply to exempt land or land valued below specific thresholds.
How Is Land Tax Calculated?
The easiest way to calculate your land tax payable is to use a land tax calculator; this gives you an estimated land tax amount. However, the tax calculator may not be completely accurate.
Here are the examples of land tax calculations for various states and territories in 2024 for a property worth $1 million.
NSW
If you’re an Australian or PR living in Australia, you don’t have to pay any land tax on a land of $1 million. However, if you’re a foreigner or PR living overseas, you must pay a $40,000 surcharge.
Queensland
If you’re an Australian or PR, you must pay $4,500 in land tax on a land of $1 million. If you’re a foreigner, you must pay $34,500, including the $30,000 surcharge.
Victoria
For property valued at $1 million, Australian or PR must pay a land tax of $4,650. For a foreign investor, the total cost is $44,650 (including the $40,000 surcharge).
Tasmania
If you’re an Australian or PR, you must pay $9,238 in land tax on a land of $1 million. If you’re a foreigner, you must pay $29,238, including the surcharge.
Southern Australia
For a land of $1 million, you must pay $1,340 in land tax, regardless of your tax residency status.
Western Australia
If you’re an Australian or PR, you must pay $1,750 in land tax on a land of $1 million. If you’re a foreigner, you must pay the same amount.
Australian Capital Territory
If you’re an Australian or PR living in Australia, you must pay $12,212 in land tax on a land of $1 million. If you’re a foreigner or PR living overseas, you must pay $19,172.
Are There Land Tax Exemptions for Foreign Owners?
There are some limited exemptions from land tax for non-residents and foreign owners in Australia, primarily related to the use of the property. Land used for primary production purposes like farming or mining might be exempt from land tax, regardless of ownership.
Moreover, if you own a property in the Northern Territory, you don’t have to pay land tax regardless of your residency and citizenship. Also, some states may have less or limited surcharges, which can reduce your land tax liability.
It’s important to note that the exemptions are specific to certain circumstances and may not apply to all foreign property owners.
How to Apply Land Tax to Your Tax Return as A Foreign Owner
You can add land tax to your tax return after receiving your land tax assessment. A land tax assessment is how the government works out what your properties are and how much land tax you must pay each year. They determine how much you must pay on a property by assessing its value yearly.
Once you have this, you can apply land tax to your tax returns using the following methods.
Online
You can pay for your land tax with an online ATO form. The online method is the quickest way to add your land tax to your tax return; it processes in around two weeks.
Through A Registered Tax Agent
You can use one of these to ensure you correctly apply land tax to your tax return without making any mistakes. Remember that you will have to pay for their services, but for some, the cost is worth it if the registered tax agent can guarantee an accurate tax return form.
Paper Tax Return Form
For older expats, an online tax return is not the most straightforward format or not the one they find the most comfortable.
Instead, they can fill in a paper tax return, add their land tax amount, and mail it to the Australian Taxation Office.
Don't Let Australian Land Tax Catch You Off Guard
As a foreign property owner in Australia, understanding and complying with land tax obligations is crucial. Your land tax liability depends on the total value of your land holdings, factoring in the foreign ownership surcharge. To avoid penalties and interest, ensure timely land tax return and payment submission.
Our team at Odin Tax can assist you in navigating the complexities of Australian land tax while overseas. We specialise in non-resident tax for property investors and can help ensure you meet all your tax obligations and optimise your tax strategy.
Contact us today for a consultation. Take the first step to making informed decisions, minimising tax liabilities, and leveraging your investment in Australia.
FAQs about AU Land Tax and Surcharge for Foreign Owners
How much land tax can an Australian expat expect to pay, and how can they calculate it?
The land tax assessor will calculate your tax for you, but if you want an estimate, use a land tax calculator.
Remember that the calculator may not account for your foreign ownership surcharge.
Who needs to pay land tax in Australia?
Here are some people who need to pay land tax in Australia.
- Property Owners Who Own Land Above a Certain Value Threshold: This threshold varies from state to state, but it generally applies to the total taxable value of all the land you own, excluding your primary residence.
- Investors and Landlords: If you own investment properties or holiday homes, you may be liable for land tax, depending on their value and location.
- Trusts: Trusts that own taxable land may also be liable for land tax.
- Foreign Owners: If you’re a foreign owner of Australian land, you may be subject to additional land tax surcharges.
How often do Australian expats have to pay land tax?
Usually, land tax is an annual charge. However, you may have to pay it more than once yearly if you have multiple properties.
You should know that if you own property in a country that isn’t Australia, you don’t have to pay land tax on it.
What is the best way to apply land tax to your tax return?
The best way to apply land tax to your tax return will depend on what method suits your preferences.
For example, you can complete an online form if you want an easy and fast solution. Other options include going through the process with a registered tax agent or filing a paper tax return.
Do I have to pay capital gains tax on land sale in Australia if I'm a foreign owner?
Yes, as a foreign owner of land in Australia, you will generally be subject to capital gains tax (CGT) on any gains you make from the sale of the land.
However, the specific rules around foreign resident capital gains tax can be complex. It may depend on various factors such as the type of land, your residency status, and the timing of the sale. It’s important to seek advice from a tax professional who can provide tailored advice based on your individual circumstances.
What is the land tax in Victoria?
Land tax is an annual tax on the ownership of land in Victoria. It applies to land valued over a certain threshold. The threshold in Victoria is $250,000 for the 2023-24 tax year.
How can I avoid land tax in Victoria?
There are ways to reduce your land tax burden in Victoria, but navigating the rules is crucial. Options include keeping total land under the threshold, land ownership structures like trusts, or land exemptions for primary places of residence or farmland. But care is needed as anti-avoidance rules apply.
How to calculate land tax in Queensland?
To calculate land tax in Queensland, you need to aggregate the taxable value of all your land holdings, deduct any exemptions and the tax-free threshold, then apply the progressive tax rates to the remainder to determine your liability, checking for any rebates. Refer to the Queensland Land Tax Guide for current rates, thresholds and exemptions.
How much is land tax in NSW?
Land tax in NSW is an annual tax payable on the taxable value of land holdings above the $755,000 threshold, with progressive tax rates from 1.6% to 2%, but exemptions apply for principal residences, farmland, aged care facilities, etc.
What is a land tax assessment?
A land tax assessment is how the government works out what your properties are and how much land tax you must pay each year.
They determine how much you need to pay on a property by assessing its value yearly. They do this with methods respected and recognised in the tax evaluation industry. These methods include evaluating the property’s sale and other details (like improvements).
Concerning property improvements, The Office of the Valuer General doesn’t count any improvements made to improve the house’s structure and keep its integrity.
Instead, they only count improvements you make to the house for cosmetic reasons; some of these improvements include:
- Adding extra draining or cleaning the current drainage system.
- Filling any gaps in the property.
- Retaining walls by painting or filling them.
- Excavating any part of the property.
- Grading or levelling any piece of the land.
- Removing rocks, soil or sand from the property.
- Clearing timber (or any other wood) or vegetation like vines or flowers from the property.
Once they complete the valuation, they will send it to you. However, the number the evaluators send won’t necessarily be the number you must pay. If you disagree with the final valuation, you can send an objection to them.
Before sending an objection, you must ensure you make it while a land tax assessment is in force. It must be between 1st July and 30th June in a financial year. Additionally, you must file your complaint within 60 days of receiving your first notice from the rating authority.
Also, remember that you must lodge multiple objections if you want to dispute land tax assessments on numerous properties.
Who needs to pay land tax in Australia?
Here are some people who need to pay land tax in Australia.
- Property Owners Who Own Land Above a Certain Value Threshold: This threshold varies from state to state, but it generally applies to the total taxable value of all the land you own, excluding your primary residence.
- Investors and Landlords: If you own investment properties or holiday homes, you may be liable for land tax, depending on their value and location.
- Trusts: Trusts that own taxable land may also be liable for land tax.
- Foreign Owners: If you’re a foreign owner of Australian land, you may be subject to additional land tax surcharges.
What is the tax on foreigners buying property in Australia?
Foreigners buying property in Australia face several additional taxes compared to domestic buyers. One significant tax is the Foreign Buyer Surcharge. This surcharge is added to the standard stamp duty and applies to most states and territories. The exact rate varies by state, but it typically ranges from 7% to 8% of the property’s purchase price.
In addition to the surcharge, foreign buyers may also be subject to land tax surcharges. This applies to the annual tax levied on the value of land owned. The surcharge rate varies by state, but it can significantly increase the overall cost of property ownership.
It’s important to note that these are just some additional taxes foreign buyers may encounter. Other factors, such as the specific state or territory where the property is located and the type of property being purchased, can also influence the overall tax burden.
How can I pay land tax as a foreign owner?
You can use a few methods to pay your land tax on properties.
Credit Card
To pay for your yearly land tax outright, you can head to your local government’s State Revenue Office website and pay for it using a credit card.
To pay for outstanding land tax using a credit card, you can select it on the revenue line payment page after selecting ‘land tax’.
Remember that you will have to pay 0.45% interest on your credit card payment when you pay your land tax.
BPAY
If you prefer to pay your land tax directly from a savings account, you can do it with BPAY.
To make the land tax payment, you need to look at your land tax assessment notice and find the reference number and the biller code.
You can then make the payment from your online bank account (you can also make the payment via your bank’s telephone service).
AutoPay
AutoPay (or any other viable instalment system) will likely be the most popular option for many people because you can make land tax payments in multiple instalments.
With AutoPay, you can spread these payments over a maximum of 38 weeks if you need a more extended period.
Additionally, you can make these payments every two weeks if you want to, or you can make them monthly. Finally, if you can afford higher costs, you can even choose to pay the land tax across four instalments (equal in value).
What are the property taxes for non-residents in Australia?
Non-residents in Australia face several property-related taxes, including:
- Stamp Duty: Non-residents often pay an additional surcharge on top of the standard stamp duty, which can range from 7-8% in states like New South Wales and Victoria.
- Land Tax: Non-residents are subject to land tax, with additional surcharges in some states. For instance, NSW imposes a 4% surcharge on residential land owned by non-residents, while Victoria levies a 2% absentee owner surcharge.
- Foreign Investment Review Board (FIRB) Application Fees: Non-residents must obtain FIRB approval for property purchases, incurring application fees based on the property value.
- Capital Gains Tax (CGT): Non-residents are liable for CGT on Australian property sales, without the 50% discount available to residents. From 1 July 2027, new legislation replaces the 50% CGT discount with cost-base indexation; residents can still use the discount for gains accrued before that date, and foreign residents generally cannot access it.
- Vacancy Fee: A fee equivalent to the FIRB application fee may apply to foreign-owned residential properties vacant for more than six months per year.
It’s important to note that specific tax rates and rules vary across states and territories. Consulting with a tax advisor is crucial to fully understand the tax implications of owning property in Australia as a non-resident.
