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Land Tax and Property Sales in Queensland: What Sellers Need to Know

Queensland land tax catches a lot of investors off guard at settlement. Here is how it works, who pays what, and what sellers need to arrange before the contract goes unconditional.

Land tax is one of those costs that experienced property investors manage as a routine part of ownership, but that can create real complications at settlement if sellers do not prepare for it in advance. Queensland imposes land tax on the total taxable value of land held above a threshold, assessed annually as at midnight on 30 June each year. If you are selling an investment property or a property that is not your principal place of residence, land tax is worth understanding before you list, not after the contract is signed.

How Queensland land tax works

The Queensland Revenue Office levies land tax on the unimproved value of land held in Queensland above the applicable threshold. For individuals, the threshold for the 2025-26 financial year sits at $600,000. Land held in companies and trusts is taxed at a lower threshold. The tax is assessed on the combined value of all Queensland land you hold, not on each individual property in isolation. So an investor who holds two properties with land values of $350,000 each would have a combined taxable land value of $700,000, which exceeds the threshold and attracts land tax on the excess.

The tax is assessed annually on the basis of land held at 30 June. This means the entire year's liability is determined by who holds the land at that date, regardless of when during the financial year a sale takes place. If you sell a property in November, you were assessed for the full year's land tax as at the preceding 30 June. The buyer, who did not own the land until November, will have their land tax assessed at the following 30 June based on their own portfolio at that date.

Principal place of residence exemption

Your principal place of residence is exempt from land tax in Queensland. If you live in the property and it is your primary home, no land tax applies, regardless of the land value. The exemption is not automatic in all cases. The Queensland Revenue Office assesses it based on whether you genuinely use and occupy the property as your home. Where a property has been rented for part of the year and occupied by the owner for another part, the exemption may be applied on a proportional basis.

For sellers of investment properties or holiday homes, the exemption does not apply. For sellers of a home they have recently moved out of to prepare for sale, the position depends on the timing and circumstances. Your solicitor can advise on your specific situation. This is not an area to guess at.

Land tax clearance certificates and settlement

This is where sellers frequently run into difficulty. A land tax clearance certificate is a document issued by the Queensland Revenue Office that confirms whether any land tax is outstanding on the property being sold. The REIQ residential and commercial contracts both contain provisions that give buyers the right to request a land tax search, and the standard contract allows buyers to withhold a portion of the settlement proceeds if a clearance certificate has not been obtained or if it reveals an outstanding liability.

The practical implication is this: if you have outstanding land tax at the time of settlement, the buyer's solicitor has grounds to retain an amount from your settlement proceeds to cover that liability before releasing the balance to you. This is not a penalty or an unusual measure. It is a standard protection for buyers who would otherwise inherit a tax debt attached to the land they have just purchased.

The right approach is to apply for a land tax clearance certificate early, ideally once the contract goes unconditional, and to deal with any outstanding liability before settlement. Applications are made through the Queensland Revenue Office and processing times can vary, particularly in busy periods. Your conveyancer or solicitor should be managing this as part of the settlement process, but it is worth confirming they have it in hand.

Apportionment at settlement

Land tax is not typically apportioned between buyer and seller in the same way that council rates and water charges are. Rates and water are apportioned at settlement based on the number of days in the billing period that each party has owned the property. Land tax is assessed on an annual snapshot basis (the 30 June position), so there is no daily apportionment. The seller is assessed for the full year's liability based on the position at 30 June, regardless of when they sell.

Some contracts, particularly in the commercial property space, attempt to negotiate land tax apportionment, but this is not standard in residential Queensland contracts. Sellers should not expect the buyer to contribute to land tax as part of the settlement adjustment. The liability belongs to the seller for the assessment year in which the property is sold, and the buyer's obligation begins at the following 30 June.

What investment property sellers should do before listing

The steps are straightforward. Before you list, review your land tax position with your accountant or the Queensland Revenue Office. If you have a liability outstanding from the previous assessment year that you have not yet paid, understand how large it is and factor it into your sale expectations. Make sure your conveyancer is instructed to apply for a clearance certificate as soon as the contract is executed. Do not assume the matter will resolve itself at settlement without active management.

If you hold multiple Queensland properties and are selling one of them, be aware that a clearance certificate for the property being sold does not necessarily mean you have no outstanding land tax. It confirms the position for that specific title. Your broader land tax obligations across your portfolio are a separate matter that your accountant should be across.

Land tax is not a reason to avoid selling an investment property. It is simply a known cost that needs to be managed with the same attention as any other settlement item. Sellers who understand it in advance are in a much better position than those who encounter it for the first time in a solicitor's email three days before settlement.