Land tax
An annual state tax on the value of land you own, excluding your main residence, above a tax-free threshold.
- Charged every year by state governments
- Based on land value, not property value
- Thresholds and rates differ by state
How it works
Each state adds up the taxable land value of your holdings in that state and charges tax above its threshold. Trusts and companies often have lower or no thresholds.
Why it matters for investors
Holding several properties in one state can push you over the threshold, adding a yearly cost. Spreading across states is one reason investors buy nationally.
Land tax is a real holding cost that many investors forget. Include it in your cash flow before buying.
Common questions
Do I pay land tax on my home?
Generally no, if it is your principal place of residence.
Is land tax deductible?
For investment properties, generally yes. Confirm with your accountant.
Related terms
Sources
General information only. It does not consider your objectives, financial situation or needs, and is not financial, credit, tax or legal advice. Rules change, so check current law and get advice from a licensed professional before acting.