Planning for land tax in Western Australia

Will you pay land tax in Western Australia?

If you own land in Western Australia, you may be required to pay land tax on your property, subject to specific exemptions. The tax applies when the total unimproved value of your land exceeds $300,000. This threshold considers the combined value of all your landholdings, even if individual parcels are valued below the limit.

How does land tax assessment work in Western Australia?

Land tax is an annual charge based on property ownership at midnight on 30 June. The Western Australian valuer-general calculates the total aggregated unimproved value of all land registered under your name, excluding your primary residence, based on valuations from the previous financial year.

The unimproved value refers solely to the land itself, disregarding any structures or improvements. After the assessment is finalised on 30 June each year, the values are combined, and the appropriate land tax is applied. Assessments are typically sent out in November or December.

How land tax is calculated in Western Australia

The valuer-general determines land tax rates based on the value range of your taxable land:

• Up to $300,000: Exempt
• $300,000 to $420,000: Flat rate of $300
• $420,000 to $1 million: $300 plus 0.25% of every dollar over $420,000
• $1 million to $1,800,000: $1,750 plus 0.9% of every dollar over $1 million
• $1,800,000 to $5 million: $8,950 plus 1.8% of every dollar over $1,800,000
• $5 million to $11 million: $66,500 plus 2% of every dollar over $5 million
• Over $11 million: $186,550 plus 2.67% of every dollar over $11 million

Growth in land tax revenue

Land tax revenue has risen significantly in recent years due to increasing property values:

• 2021–2022: 7.24% growth to approximately $815 million
• 2022–2023: 6.87% growth to approximately $871 million
• 2023–2024: 6.66% growth to approximately $929 million
• 2024–2025: 6.24% growth to an estimated $987 million

Exemptions to land tax

Certain types of land may be exempt from land tax, including:

• Primary residence
• Land used for primary production
• Subdivided residential land
• Land built for rent
• Land owned by charities, non-profit groups, or religious institutions
• Aged care facilities, retirement villages, and caravan parks
• Crown land or land used for public purposes
• Mining tenements or conservation covenants

What do you need to consider as a landowner?

Land tax is straightforward but can become complex due to rising unimproved land values and ownership structures. Ownership details recorded by Landgate influence tax assessments. If land is held in trust, separate ownerships may need to be clarified with the Office of State Revenue to ensure accurate assessments.

For example, if you own property as an individual ($500,000 unimproved value) and as a trustee ($1 million unimproved value), the aggregated value is $1.5 million, resulting in a tax of $6,250. However, separate ownerships would result in $2,050 in tax ($300 for the individual and $1,750 for the trust).

What is the Metropolitan Region Improvement Tax (MRIT)?

The MRIT applies to land with a land tax liability in Perth’s metropolitan area. It is charged at 0.14% of every dollar over $300,000 of unimproved value, funding public facilities in the metropolitan region.

Plan for land tax in your investment strategy

When investing in land, consider factors such as asset separation, future capital gains tax, succession planning, and annual land tax liabilities. Professional advice can help you minimise holding costs and structure your investments effectively.

To learn more about planning for land tax, contact an RSM adviser today.