Land Tax is a State imposed tax paid annually by many land owners in Australia. In WA Land Tax is calculated on the aggregated unimproved value of all land held by an owner as at midnight 30th June each year. For example, if you solely own two properties with unimproved values of $330,000 and $270,000, you have an aggregated value of $600,000.
In WA, total land holdings (excluding exempt land) with an unimproved value of $300,000 or more will receive a land tax assessment. The land tax payable increases incrementally on a sliding scale from rates of 0.25% to 2.67%. The current rates of land tax payable in Western Australian can be found on the Department of Finance WA website.
Other states have similar rules, but exemptions and rates differ, so you should inquire with the relevant State taxing authority to find further information for land held outside of WA.
Land tax is assessed on the unimproved value of land only. These valuations are undertaken by the Valuer-General in Western Australia and notices are issued based on land ownership and use as at midnight 30th June each year. No land tax is payable on your primary residence.
For properties located within the metropolitan region an additional tax is levied called the Metropolitan Region Improvement Tax (MRIT). This additional tax is calculated at 0.14 cents for each dollar that your aggregated unimproved land value exceeds $300,000. For example, if your total aggregated unimproved land value (excluding exempt land) is $500,000, the MRIT payable will be $280.
There are various exemptions and concessions available to reduce or negate land tax, the most common being:
- Land owned by yourself as an individual and used as your primary residence
- Private residence under construction or refurbishment at 30th June
- Moving from one residence to another
- Land used for a primary production business
- Land held by a recognised charitable organisation
If you disagree with your Land Tax assessment you are able to lodge an objection. The above website has additional information on how this can be lodged.
Pro tips:
- If your private residence is held in or owned by a company or trust, you generally won’t get the primary residence exemption
- Land holdings held in a trust are assessed separately (i.e. not aggregated) to land held in your own name
- Land tax on commercial property is usually recoverable through outgoings, so there is no cost to the owner
- You can object against a land tax assessment within 60 days of the issue date of the assessment, including an objection as to the value placed on the land
Fun fact:
- Land held in the Northern Territory is exempt from land tax. It is the only state in Australia that does not charge land tax, although they will levy vacant or derelict CBD land and buildings from 1 July 2019.
Other related blogs:
New tax rules for property sales above $2m from 1 July 2016
Benefits of obtaining pre-approval on purchasing a property
Buying a property – tenants in common v joint tenants
Author: Georgia Burgess
Email: georgia@faj.com.au
