WA landowners cautioned on tax obligations as values soar

RSM has reminded Western Australian landowners of their land tax obligations as property values continue to increase across the state.

In WA, land tax applies to individuals who own a combined unimproved land value that exceeds $300,000.

Rising land prices in WA pushed more property owners into the taxable threshold, mirroring trends in other states such as NSW.

Experts have said that this has put pressure on people with limited ability to pay, such as those with high-value land but low cash reserves.

“Land tax is straightforward but can become complex due to rising unimproved land values and ownership structures,” RSM said in its release.

Western Australia’s land tax revenue has grown year on year since 2021 due to rising property values, up to an estimated $987 million in 2024–25. Assessments are finalised on 30 June each year.

Additional taxation, the metropolitan region improvement tax is applied to metropolitan WA landowners to fund public facilities and services.

In WA, certain types of land are exempt from taxation such as land used for primary residences, primary production and mining tenements.

The state government also announced exemptions for land used for build-to-rent developments in 2024, in effort to boost the availability of rental properties in Western Australia. Build-to-rent properties would gain a 50 per cent exemption from land tax for eligible developments, under certain conditions.

RSM outlined how ownership structures can affect total tax liabilities. For example, somebody who owned a property worth $500,000 in unimproved value as an individual, and a property worth $1 million as a trustee, would have a tax liability of $6,250, based on the combined property value of $1.5 million.

If these properties were to be owned by separate individuals, the tax bill would total $2,050, highlighting the impact that ownership structures can have on tax liabilities.