Guide to Property Taxes in Australia

Nonresident individuals are generally subject to Australian income tax only on their Australian-source income, including rental income derived from Australian real estate. Individuals are taxed separately for income tax purposes. Australia's tax year runs from 1 July to 30 June.

Income Tax

Nonresident individuals are subject to Australian income tax at progressive rates. Unlike Australian residents, foreign residents generally do not benefit from the tax-free threshold.

For the 2025–26 income year, the following rates apply:

Income Tax for Foreign Residents:

Rental Income

Rental income earned by a nonresident individual from Australian real estate is generally included in Australian taxable income and taxed at the applicable foreign-resident income tax rates.

Qualifying expenses incurred in earning rental income may generally be deducted. These can include property management fees, council rates, insurance, land tax, eligible interest and borrowing expenses, repairs and maintenance, body corporate charges and certain depreciation or capital works deductions, subject to the applicable rules.

Travel expenses incurred by an individual to inspect, maintain or collect rent from a residential rental property are generally not deductible, subject to limited exceptions.

Capital Gains

Nonresident individuals are generally subject to Australian Capital Gains Tax (CGT) on taxable Australian property, including Australian real estate. A taxable capital gain is generally calculated by deducting the property's cost base from the capital proceeds received on disposal.

The cost base may generally include the property's acquisition price, certain incidental acquisition and disposal costs, qualifying capital improvement expenditure and certain non-deductible ownership costs, subject to the applicable CGT rules.

Foreign and temporary residents are generally not entitled to the full 50% CGT discount for gains accruing after 8 May 2012. If Australian real estate was acquired after 8 May 2012 and the individual remained a foreign or temporary resident throughout the ownership period, no 50% CGT discount is generally available. Special apportionment rules can apply where the property was acquired before 9 May 2012 or the individual was an Australian tax resident for part of the relevant ownership period.

The resulting net taxable capital gain is generally included in the nonresident individual's taxable income and taxed at the applicable foreign-resident income tax rates.

Corporate Taxation

Australian companies are generally subject to corporate income tax at a rate of 30%. A reduced rate of 25% applies to qualifying base rate entities with aggregated annual turnover below AUD 50 million, provided the applicable passive-income test is also satisfied.

Rental income and taxable capital gains are generally included in the company's taxable income, while qualifying expenses incurred in producing taxable income may generally be deducted.

Importantly for property investment companies, the 25% rate is not available merely because turnover is below AUD 50 million. A company must also satisfy the base rate entity passive-income test. Rent and net capital gains are generally classified as base rate entity passive income for this purpose.

Buying and Selling Costs

Property Holding Tax

Land Tax

Australia does not impose a single nationwide annual property tax. Instead, land tax is generally imposed by individual states and territories on the unimproved or site value of taxable land. Rates, thresholds and exemptions vary significantly between jurisdictions.

An owner's principal place of residence and certain primary-production land are generally exempt from ordinary land tax, subject to the rules of the relevant state or territory. Investment and rental properties may be subject to annual land tax where the applicable land-value thresholds are exceeded.

Foreign and absentee owners can face substantially higher land-tax liabilities in certain jurisdictions because additional surcharges may apply. Consequently, the annual holding tax for a nonresident foreign investor can differ significantly from the ordinary land-tax rates applicable to Australian resident owners.

The tax rates vary from 0% - 2%