NSW and Victoria Land Tax Changes for 2026: What Investors Face

Two changes matter more to an investor holding several properties across New South Wales and Victoria than any single headline rate rise. In NSW, the land tax thresholds have stopped moving with property values. In Victoria, the vacant residential land tax and the absentee owner surcharge have both been widened or locked in for longer than many investors expect. Neither is a rate increase in the usual sense, which is exactly why it is easy to miss until an assessment notice arrives.

NSW's land tax thresholds are now frozen, not indexed

Revenue NSW has confirmed the general threshold for the 2026 land tax year at $1,075,000, with the premium threshold at $6,571,000. Land tax applies to the unimproved value of your NSW landholdings above the general threshold at 1.6%, rising to 2% above the premium threshold. What has changed is how the figure gets set: from the 2025 land tax year, the government fixed both thresholds at their 2024 levels instead of indexing them annually to land values, with a review flagged for 1 June 2027 but no movement before then.

Why a frozen threshold still increases what you pay

Thresholds used to rise roughly with land values, so a steady portfolio tended to hold its tax position. With the thresholds fixed, only your land values move, and if they rise even modestly, more of your portfolio sits above a threshold that no longer follows. An investor just under the threshold today can be pushed above it within a year or two by land value growth alone, an owner already above it pays tax on a larger share of their portfolio each year the freeze continues, and properties held under one grouped entity compound this since the threshold is shared, not multiplied per property. This is bracket creep by design: freezing the thresholds raises additional revenue precisely because more owners become liable, or liable for more, as values rise around them.

Victoria widens vacant residential land tax to undeveloped land

From 1 January 2026, Victoria's vacant residential land tax (VRLT) reaches further than an empty house. The State Revenue Office has confirmed that unimproved residential land in metropolitan Melbourne left undeveloped for at least five consecutive years can attract VRLT, and that period can include years before 2026, so land already vacant that long is caught from day one.

The same date extends VRLT statewide to a residence left uninhabitable, or under construction or renovation, for more than two years, not just in inner and middle Melbourne as before. An investor sitting on a slow renovation or a stalled build anywhere in Victoria should check it against that clock.

Two exemptions apply to the new unimproved land rule: land the Commissioner is satisfied cannot be developed for residential use, and land contiguous to your own home or holiday home used for private enjoyment. Owners must notify the SRO by 15 February each year if land was vacant for six months or more of the prior year.

Victoria's absentee owner surcharge and the separate COVID debt levy

Two Victorian surcharges matter here and are worth keeping apart. The absentee owner surcharge has applied at 4% since 1 January 2024, up from 2%, on top of general land tax and any trust surcharge, with no threshold and no end date flagged by the SRO. It applies to foreign individuals, corporations and trusts with foreign beneficiaries who are not ordinarily resident in Australia, not to Australian citizens or permanent residents living overseas.

Separately, Victoria's COVID Debt Repayment Plan added flat and percentage surcharges to general land tax from the 2024 land tax year, legislated to run only through the 2033 land tax year. These apply to every liable landowner above $50,000 of taxable land value, not just absentee owners, so a Victorian portfolio can carry both this general surcharge and, for foreign or absentee ownership, the separate 4% surcharge on top.

What it means for structuring a multi-state portfolio

None of this changes the case for a sound ownership structure, own name, trust, company or SMSF each still carry the same trade-offs covered elsewhere on our site. What changes is the arithmetic: a structure modelled against last year's NSW thresholds or Victoria's old VRLT boundary may no longer reflect what you actually pay next year. Model land tax separately for each state, since NSW and Victoria set their own thresholds, rates and grouping rules and efficiency in one does not carry over to the other; revisit any Victorian land undeveloped or under renovation for several years, since the five-year and two-year clocks may already be running against you; and check your residency and entity status against Victoria's absentee owner rules if any beneficiary, director or trustee is overseas.

Land tax is reassessed every year regardless of what you have bought or sold, so a structure that was efficient two years ago is worth checking again now. Speak to us about your circumstances before assuming last year's numbers still hold.

Disclaimer: This article contains general information only and does not constitute financial, legal or tax advice. It has been prepared without regard to your objectives, financial situation or needs. Tax and superannuation laws change frequently, and the information in this article may not reflect the current law or may become inaccurate over time. Before acting on anything in this article, you should consider its appropriateness to your circumstances and seek advice from a registered tax agent or qualified adviser.