Excessive land tax increases are placing additional pressure on Sunshine Coast investors, property owners and tenants in an already challenging economy. The Queensland government has not increased land tax thresholds for 17 years, meaning increased land values in the region are resulting in disproportionately high land tax rates.
In Queensland, land tax charges kick in when the total land value of a person’s investment properties is $600,000 or more or $350,000 if you’re a company. This scale has not changed since 2007 despite significant and natural increases in commercial and residential property values during that time.
While the government seems reluctant to budge on its approach, likely due to soaring land tax revenue, investors and tenants are being forced to make some difficult decisions.
HOW DOES LAND TAX CALCULATION WORK IN QUEENSLAND?
Total land tax payable in a year is calculated for individual properties by the state government on land you own at midnight on 30 June each year. The taxable value of your land is based on your annual land valuation issued by the Valuer-General.
The land tax rate depends on the type of owner you are. There are different rates for individuals, absentees, foreign owners, companies and trusts. Land tax applies to various types of land including residential, commercial and industrial.
But the annual land valuation system is ad hoc, meaning not every LGA is assessed annually. Assessments generally apply to areas that have experienced higher property value growth, meaning growing areas like the Sunshine Coast and Noosa are being reassessed more often.
THE IMPACT OF LAND VALUATION AND LAND TAX INCREASES
The Sunshine Coast LGA was subject to annual land valuations in 2022 and 2024. In 2024, the region was one of only 20 out of the 62 LGAs statewide reassessed. The 2024 valuation included 114,389 properties, with a total value of $70,997,462,500, an overall increase of 36 per cent since the last valuation in 2022.
Noosa was subject to annual land valuations in 2022 and 2023. An example of a Noosa Junction commercial property shows an almost doubling of the land value could result in a 1132% increase in land tax for land owned by an individual or a 117% increase for company-owned land.
Assessed Land Value 30 June 2022 $620,000
Assessed Land Value 30 June 2023 $1,250,000.
If individually owned:
Land Tax as at 30 June 2022 – $700
Land Tax as at 30 June 2024 – $8,625
If company owned:
Land Tax as at 30 June 2022 – $6,040
Land Tax as at 30 June 2024 – $16,750
“These are extraordinary increases that our local economies must pay to the government simply because they have not increased the scale of land tax in line with inflation since 2007. Perhaps with an upcoming election, some influence could be brought onto the likely government with appropriate pressure from real estate bodies like the REIQ or the PCA ,” says Paul Butler.
Noosa and the Sunshine Coast have both been excluded from valuation reviews in 2025.
HAVOC IN THE MARKETPLACE
Commercial leases often contain conditions requiring tenants to contribute to a property owner’s land tax bill.
RWC Noosa & Sunshine Coast principal Paul Butler says many commercial property investors are seeking to recover these costs. While previously a high number of owners were absorbing land tax costs, many are either starting to draw on the provision in the lease allowing collection or trying to increase rents.
“The wholesale effect is that this approach is creating havoc in the marketplace. Some owners are being forced to sell because the land tax strips their return on the investment,” Paul said. “It’s a massive impost on all commercial and residential owners with a flow-on effect for tenants. You have to factor it in somewhere, whether its rent, operating costs – you have to find it in your budget and often that means passing some or all onto tenants”.
“In instances where land tax can be passed on, it is having a searing effect on the businesses being forced to pay it which can ultimately impact the viability of a tenant’s business. Take, for example, a premises valued at $2 million. The tenant pays $100,000 a year in rent but then gets a $20,000 tax bill and they’ve increased operating costs close to 20% overnight.”
Paul says this is particularly the case with blue chip freestanding commercial properties in locations across the Sunshine Coast from Caloundra to Noosa.
“The land tax scales show how much it increases as the value gets higher. As properties have become much more valuable, many have jumped into higher brackets so people are paying higher and higher percentages every year.”
THRESHOLD OUT OF TOUCH WITH QUEENSLAND PROPERTY MOVEMENT
Paul Butler believes the $350,000 and $600,000 thresholds are outdated and need urgent review.
“Valuations of property have been occurring steadily throughout Queensland and, based on market movements, land values have increased substantially, in some instances excessively. But the state government has not increased land tax thresholds since 2007.”
“Yet you cannot blame the government valuers for the obvious and substantive market movement, they are simply recording and analysing sales to arrive at the valuations. In our discussions with the local valuation firms, in most instances the valuations adopted are relatively close to market. There are cases where the government has got the numbers wrong, but it’s not the crux of the problem.”
A report from the ABC indicates that the number of Queensland properties subject to land tax increased by more than 10 per cent last year as the value of land continued to rise.
Meanwhile the Real Estate Institute of Queensland continues to call for the indexation of land tax.
“Over the past five years, Queensland has recorded the highest growth in property taxes of any state,” said Antonia Mercorella, REIQ CEO. “It’s clear our state’s antiquated property tax system is no longer fit for purpose, and this unhealthy addiction to new highs of property revenue must be tapered and kept in check.”
NEGOTIATION THE KEY TO RESOLUTION
Many owners are looking at leases to see if they can pass land tax onto tenants. Paul Butler recommends engaging your commercial agent to assist.
“Everyone has to be very careful about how to approach this issue,” he said. “Yes, you could just send your client a bill but that’s not necessarily beneficial for either you or the tenant and certainly not the relationship.
“In the first instance, come and talk to us about the situation. We have options an owner can look at both immediately and over the longer term and techniques to manage the conversation between the parties involved.”
Get in touch with our team on +617 5474 7600.
Offices in NOOSA | CALOUNDRA | MAROOCHYDORE
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