With the 2026-27 Federal Budget approaching this May and the government actively weighing up structural property tax reforms, the Australian property landscape is navigating a period of significant legislative flux. State and territory governments continue to grapple with the dual challenges of revenue generation and housing supply. Across the nation, the focus on tax reform is intensifying, with each jurisdiction adopting distinct levers to manage market dynamics. In some states, we are seeing a ‘layering’ of new taxes that adds complexity and compliance burdens for developers, while others are pivoting toward targeted relief measures designed to stimulate construction and assist first-home buyers.
This divergence in policy creates a challenging environment for investors and property developers operating across borders. The tension between fiscal consolidation and the urgent need to unlock housing stock is driving reforms ranging from strict compliance crackdowns in New South Wales to structural overhauls of lease variation charges in the ACT. Meanwhile, the debate over replacing transaction-based stamp duties with broad-based land taxes continues to gain momentum in the west. As holding costs rise and feasibility tightens, understanding these state-specific nuances is critical for effective project planning. The following analysis outlines the key tax developments and reform agendas currently shaping the property sector across Victoria, New South Wales, the ACT, Western Australia and Tasmania.
Victoria
Victoria is currently grappling with a complex layering of property levies, including land tax, windfall gains tax and the recently introduced commercial and industrial property tax. This cumulative burden has quietly expanded the tax net, capturing businesses and investors that were likely never intended to be primary targets of such measures. The rising annual holding costs are now discouraging boutique to mid-size developers from pursuing new projects, creating a feasibility crunch that is particularly acute in regional areas where housing is needed most.
Industry sentiment suggests that a bipartisan approach to tax simplification is essential to restoring economic confidence and stimulating construction activity. To attract new investment and meet housing demands, there are strong calls for the Treasury to reconsider the form and role of the absentee owner surcharge for both stamp duty and land tax. A more proportionate and predictable regime would materially improve Victoria’s competitive position and provide the certainty developers need to undertake concurrent projects.
New South Wales
Revenue NSW has intensified its scrutiny of the primary production exemption, effectively making the holding of landbanks more expensive for developers who rely on agricultural concessions. While land tax is generally charged at 1.6% above the unimproved value threshold, exemptions exist for land where the dominant use is agriculture. However, the recent High Court decision in Godolphin Australia Pty Ltd v CCSR [2024] has strictly defined terms such as ‘dominant use’, empowering authorities to rigorously review claims involving activities ranging from horse racing to bee keeping.
This crackdown forces landholders to provide significant documentation to prove their agricultural activities are not merely incidental but the primary purpose of the land. For property developers attempting to mitigate holding costs through minimal farming operations, the bar has been raised significantly. To successfully claim the exemption moving forward, investors must ensure their operations are substantial enough to meet the strict legal definition of dominant use and are supported by robust evidence.
Australian Capital Territory
The ACT government has announced a reform of the lease variation charge (LVC) framework to better support housing delivery, affordability and precinct renewal. The anticipated changes include remissions for affordable and social housing, a new framework offering lower LVC rates for projects delivering public assets or infrastructure upgrades and time-limited incentives to accelerate medium-density housing in priority locations. These measures address a local economy where housing supply has been a vexed issue, exacerbated by significant tax costs and lengthy approval processing times.
This announcement represents a positive step toward a more transparent system that removes friction and increases the appetite for local and external capital investment. By allowing developers to better predict their liability and move projects through the planning process more efficiently, the reforms aim to support the delivery of more homes in town centres and local precincts. A simplified LVC with sensible targeting is expected to provide the certainty required for developers to progress projects that might otherwise stall.
Queensland
Queensland’s property market is facing unique challenges through significant demand pressure, a tight labour market and declining productivity.
The state’s unprecedented record pipeline of public infrastructure works of $127.5 billion, driven by transport, mining, heavy industries and the 2032 Olympic Games has absorbed significant workforce capacity and resulted in a tight labour market in the residential sector. This has impacted the residential construction sector through higher construction costs and extended build times, creating a risk profile for developers that is just as significant as the tax layering seen in southern states.
The Queensland Governments through the Residential Activation Fund have completed the first round of a $2 billion fund to accelerate the delivery of trunk and essential infrastructure aimed at getting the infrastructure in place so more homes can be built. They have also introduced the Land Activation Program which identifies, unlocks, then releases to market underutilised Government land for housing.
Western Australia
Stamp duty has returned to the policy spotlight in Western Australia as affordability pressures and tight supply force a re-evaluation of property taxation. The state government’s March 2025 changes delivered modest relief, including lifting first-home buyer exemption thresholds to $500,000 and expanding off-the-plan concessions to include townhouses and single-tier strata homes. While these measures are expected to benefit over 22,000 households and provide some uplift in pre-sales momentum for medium-density projects, analysts warn that incremental duty relief does not address the broader structural inefficiencies in the market.
Industry groups such as REIWA are intensifying calls for a switch to a broad-based, recurring land tax to replace stamp duty entirely. They argue that transaction taxes act as a drag on mobility and suppress market turnover, limiting the ability of developers to recycle redevelopment sites and dampening project financing certainty. A move toward a land-based tax would spread the burden more evenly, encouraging productive land use and creating a more flexible housing system capable of supporting long-term supply and sustainable economic growth.
Tasmania
Tasmania is actively positioning itself for legislative change designed to stimulate local economic activity and investment. The state is moving toward a framework that offers increased incentives specifically targeted at southern businesses to encourage expansion and capital allocation within the region. These reforms acknowledge the need to remain competitive against mainland jurisdictions by creating a more favourable environment for commercial growth.
Beyond business investment, the emerging policy direction focuses on attracting new homeowners into the state to bolster population growth and housing demand.
South Australia
South Australia is experiencing an unprecedented rise in home values driven by strong interstate investor demand and an acute housing shortage exacerbated by a lack of skilled labour. With Adelaide’s median house price jumping to $925,000 in the December 2025 quarter, government plans to increase land supply face substantial delivery risks due to these ongoing workforce constraints.
On the taxation front, land tax changes implemented by the previous government require urgent review after a mandatory assessment found them unclear and skewed toward commercial rather than residential benefits. Furthermore, while the opposition has proposed eliminating residential stamp duty as an election promise, there are widespread industry concerns regarding the actual impact such a measure would have on stimulating new housing supply.
Northern Territory
The Northern Territory is offering substantial incentives to stimulate its housing market, including a $50,000 grant for first-home buyers and a $30,000 grant for eligible existing homeowners who build or purchase a new home. Both of these key property initiatives have been extended until 30 September 2027 to provide ongoing support for prospective buyers and construction pipelines.
To further boost supply, the territory is providing reduced and accelerated deductions for capital works alongside specific land tax exemptions for projects that deliver at least 50 dwellings and include a 10 per cent affordable housing component, with these measures ending on 30 June 2026. Beyond these temporary incentives, the Northern Territory remains completely unique in not levying a general land tax, which serves as a major structural factor in its overall property taxation environment.
If you’d like help understanding the property tax changes in your state, please contact your local William Buck Advisor.
