If you’re a property investor, you’re probably obsessed with rental yields, capital growth, and mortgage rates. But here’s a secret most investors forget: there’s a sneaky little cost that can quietly eat into your returns… and that’s land tax.
Ignore it, and you might be leaving thousands on the table every year. Pay attention, though, and a smart strategy can actually keep more money in your pocket. The trick? Buy across states. Simple, but surprisingly few people do it.
What is Land Tax, and Why Does it Add Up?
Land tax is levied by state and territory governments, not the federal government. This is the crucial detail.
It’s State-Based: Every jurisdiction (NSW, VIC, QLD, etc.) operates independently, setting its own thresholds, rates, and exemptions.
It’s on the Land: It only applies to the unimproved value of the land, not the value of the building structure.
Exemptions: Your principal place of residence is typically exempt.
The trap begins when you buy multiple properties in the same state.
The Aggregation Trap: Where Your Portfolio Becomes a Target
Most Australian states practice aggregation. This means if you own three investment properties in Queensland, the state revenue office doesn’t look at them individually; they add up the land value of all three.
When that aggregated value crosses a pre-defined tax-free threshold, you begin paying tax on the total value.
Buying your second or third property in the same state is often the tipping point, pushing your total land value into a higher tax bracket and activating significant, ongoing tax liabilities. In essence, you start paying tax as if you owned one, massive, high-value landholding.
How Spreading Your Assets Unlocks Multiple Thresholds
This is where the national, strategic view pays off.
Because each state has its own, independent land tax structure and threshold, spreading your properties across state lines ensures that you benefit from multiple tax-free exemptions.
| State | Tax-Free Threshold (Approx. 2025/26) |
| QLD | ~$600,000 |
| NSW | ~$1,075,000 |
| VIC | ~$50,000 |
| WA | ~$300,000 |
| SA | ~$833,000 |
| TAS | ~$125,000 |
Disclaimer: These figures are approximate thresholds and change annually. Always verify the latest rates with the relevant state revenue office or a qualified tax advisor.
A Real-World Example: The Power of Diversification
Consider two investors, both aiming for a $1.2 million aggregated land value across their portfolio:
| Investor | Strategy | Land Tax Exposure |
| Investor A (The Aggregator) | Buys 3 properties in Queensland, each with a $400K land value. | Aggregated Value = $1.2M. They exceed the QLD threshold (~$600K) and pay substantial, ongoing land tax on $600K+ of value. |
| Investor B (The Strategist) | Buys 1 property each in QLD, SA, and VIC, each with a $400K land value. | Each property stays well under its respective state threshold. Their land tax bill could be little to zero, saving them thousands every year. |
Investor B has not only minimised their land tax exposure but has also created a more robust, risk-mitigated portfolio.
Think National, Act Smart: Beyond the Tax Savings
Minimising land tax is a compelling enough reason to diversify, but the benefits of a national strategy extend much further:
Risk Management: You are not exposed to the policy or economic risks of a single state government.
Market Cycles: You gain exposure to different property cycles, allowing you to capture growth when certain markets cool down.
Rental Yields: You can strategically target high-yield markets (like regional or specialised co-living properties) without worrying about pushing up an in-state aggregated tax bill.
Bonus Strategy: Working with a nationally focused advisor can also help you manage aggregation through different ownership structures (trusts, SMSFs, personal names), further ring-fencing your assets.
Don’t Let Land Tax Dictate Your Returns
Land tax should not be the sole driver of your investment decisions, but ignoring it is a costly mistake.
Smarter investing is about mitigating risks and optimising returns through strategic planning. By diversifying your investment footprint across Australia, you not only tap into stronger, varied market opportunities but you also strategically reduce your exposure to aggregated land tax – keeping thousands of dollars in your pocket annually.
Ready to Scale Your Portfolio Smarter?
You shouldn’t have to do the legwork of national research and tax planning alone. To ensure your next investment is strategically land tax-optimised, you need national reach, local expertise, and a streamlined process.
At ALC, we partner directly with your broker, advisor, or buyer’s agent to give you access to national house and land packages that are:
Strategically selected across multiple states
Located in high-demand, growth-ready areas
Backed by real data, not guesswork
Fully packaged to give you end-to-end clarity on cost, yield, and timeline
Because we’re active in QLD, VIC, NSW and SA you’re not limited to one market – you’re building a true national portfolio without lifting the bonnet on every single state yourself.
If you’re ready to structure your next investment with a national strategy (and save thousands over the life of your portfolio) talk to your advisor or broker about partnering with ALC Projects. We’ll help them access the right stock in the right states… and help you keep more of your returns where they belong: in your pocket.
