Loans to pay a land tax bill on investment or development property

For a property investor or developer, the land tax notice is one of the biggest bills of the year, and it rarely arrives at a convenient time. A portfolio built up over a decade, a trust holding several properties, or a development site waiting for approval can produce an assessment in the tens or hundreds of thousands. Rents don’t rise to match, and a site that isn’t yet earning anything still attracts the tax.

Every state lets you spread the bill, and those options should be your first port of call. This page sets out what each state offers, what happens if a plan fails, why unpaid land tax causes problems with sales and refinances, and when a short loan secured on property is the cleaner answer.

What payment options does each state offer?

Each revenue office publishes its own rules. In summary, from their current guidance:

State	Pay in full	Spreading the bill	If an instalment is missed
NSW	Within 60 days of the notice, with a small discount	Interest-free payment plan of up to nine months (3, 6 or 9 months; fortnightly or monthly), chosen within 60 days	Plan cancelled; remaining balance overdue immediately
Victoria	By the due date on the notice	AutoPay: four equal payments over 38 weeks if the assessment isn’t overdue	Set-up deadline applies; overdue tax handled separately
Queensland	Full amount due 90 days after issue if no plan	Extended payment option: three equal payments at 45, 90 and 150 days, by direct debit, applied for within 35 days	Interest applies to a late second or third instalment
Western Australia	By the first instalment date, with a discount	Two or three instalments on set dates	Can’t continue by instalments; full amount plus penalty tax due
South Australia	By the due date on the assessment	Four instalments; first may include prior-year amounts; choose equal instalments before the due date	Unpaid remainder may become payable at once with penalty tax and interest

Revenue NSW also notes that if you have unpaid land tax from the last two years, you can request an interest-free plan, but you need to pay a portion of the new liability, the full overdue amount and any interest in the first instalment. Queensland offers longer payment plans beyond six months on application, with interest. Western Australia says to contact it before the due date if you can’t pay, because applying afterwards brings late payment penalties.

Tasmania, the ACT and the Northern Territory have their own arrangements; check with the relevant office.

Why does unpaid land tax cause so many problems?

Because of where it ranks. Revenue NSW states that unpaid land tax is a first charge on land and takes priority over all other liabilities attached to the property. In plain terms, it can sit ahead of your bank’s mortgage.

That has knock-on effects:

• Sales. A NSW seller must give the buyer a current land tax clearance certificate at least 14 days before settlement. Revenue NSW warns that a new owner can become responsible for a previous owner’s unpaid land tax, so buyers’ solicitors insist arrears are cleared.
• Refinances. A lender asked to refinance will want any charge that ranks ahead of it removed.
• Recovery action. Revenue NSW says a missed instalment leads to the plan being cancelled and recovery action, and a referred plan can’t be reinstated, though a tax debt instalment plan may then be available.

Victoria’s commercial and industrial property tax, which applies to some properties about ten years after they enter the regime, is likewise a first charge on the land until paid.

How does a land tax loan work?

1. Get the figures. The assessment, any arrears, and interest or penalties already charged.
2. Choose the security. One of the taxed properties, or another property with equity.
3. Enquire. What the property is worth in your estimate, what’s owing on it, the amount and how you’ll repay.
4. Receive terms and a Letter of Offer. Structure, amount, term, interest arrangements and fees.
5. Settle and pay the revenue office directly, getting written confirmation that the account is clear.
6. Repay from rent, a sale, a refinance or a development settlement.

Which structure suits a land tax bill?

Situation	Structure	Notes
Rental property with a bank loan you want to keep	Second mortgage or caveat	Bank loan untouched; caveat can later become a registered second
Debt-free investment property or site	Private first mortgage, 1 to 24 months	Strongest position; generally the keenest pricing
Tax holding up a sale	Short caveat loan or second mortgage over another property	Repaid from the sale proceeds
Tax holding up a refinance	Private first mortgage that clears the charge, then refinanced	One settlement, one exit

A second mortgage or caveat ranks behind the existing lender and generally costs more than a first mortgage.

How does a loan compare with the alternatives?

Option	Cost	Risk
State instalment plan	Usually lowest; NSW and Queensland EPO plans are interest-free if kept up	A missed payment can make the full balance due
Paying from cash or rent	No borrowing cost	Can strip reserves needed for repairs and vacancies
Bank equity release	Lower cost if approved	Slower; bank may require arrears cleared first
Private loan secured on property	Higher than a bank	Short term; needs a clear exit
Selling a property to pay	No debt	Forced timing; duty and agent’s costs for the buyer and seller

Who does a land tax loan suit?

It suits:

• investors whose plan has been cancelled and who need to clear the balance;
• owners whose sale or refinance is blocked by arrears;
• developers holding sites that earn nothing until approval or completion;
• portfolio owners with a large one-off bill they’d rather pay in full and repay from a planned sale.

It doesn’t suit:

• owners who can comfortably meet the state’s interest-free or low-cost plan;
• portfolios that can’t cover land tax every year, where the real issue is the portfolio’s structure;
• owner-occupied homes, which are generally exempt anyway.

When is borrowing to pay land tax the wrong move?

• An interest-free plan is available and affordable. Use it.
• The bill will recur at the same size next year with no change. A loan fixes this year, not the next. Speak to your accountant about ownership structure, which our guide on land tax for developers touches on.
• There’s no exit. If neither rent, a sale nor a refinance can repay the loan within the term, the loan simply moves the problem.
• You haven’t asked the revenue office. Hardship arrangements exist; ask before you borrow.

What it costs (without the guesswork)

We price each loan on its security, LVR, term and exit, aiming for the sharpest price the deal supports. The cost includes:

• interest, which may be prepaid or capitalised, or paid monthly;
• an assessment fee, set for each loan and printed in the Letter of Offer;
• legal and registration costs, and discharge costs at the end.

The property is assessed directly, with no formal valuation required.

Illustrative example: a cancelled plan and a pending refinance

Illustrative: a Parramatta-based investor holds four commercial units in a family trust. The NSW land tax assessment is $118k. She set up a payment plan, missed the second instalment while a tenant was in arrears, and the plan was cancelled, making $98k overdue immediately with interest running. She also wants to refinance two units to a new bank, which requires the arrears cleared. One debt-free unit is worth about $650k. At an illustrative 60% LVR band, that unit supports a first mortgage of about $390k.

Item	Amount
Private first mortgage over the debt-free unit	$120,000
Less assessment fee, legal and registration costs	$(6,000)
Less illustrative allowance for 6 months’ capitalised interest	$(8,000)
Paid to Revenue NSW (overdue balance plus interest charged)	$(106,000)

With the charge cleared, the bank refinance proceeds within six weeks and includes enough to repay the private loan. The figures are round and illustrative only.

Key terms on a land tax notice

• Assessment notice: the revenue office’s bill, showing the tax, the due date and the payment options available.
• Payment plan or instalments: the state’s way of spreading the bill; terms and any interest differ by state.
• First charge on land: a debt that attaches to the property itself and ranks ahead of other interests, including mortgages.
• Clearance certificate: a document confirming whether land tax is owing, used on a sale to protect the buyer.
• Holding costs: the costs of owning a site or property while it earns little, such as land tax, council charges and interest.

Developers facing land tax at the same time as infrastructure charges before titles issue can read about funding developer contributions and council fees, which often fall due in the same months.

Documents you’ll need

• The land tax assessment notice and any arrears or interest statements
• Correspondence about a cancelled plan, if relevant
• Title details and loan statements for the security property
• Leases and rent rolls, if the exit relies on rent or a refinance
• Trust or company details for the owner
• Photo ID for every borrower, director, trustee and security owner
• Evidence of the exit: a sale contract, a refinance offer or a development settlement schedule

How fast can the bill be paid?

Amounts of $20k to $250k secured on property can be possible the same day once documents are complete, and larger sums up to $5m can be possible within 24–48 hours. If the land tax is part of a broader tax problem, see paying an ATO debt with property equity. To fund this and other costs from a rental’s equity, see releasing equity from an investment property. Developers holding sites can read about land bank loans. Owners in Western Sydney can read about private lending in Parramatta. For why a lender cares where the tax charge sits, see first mortgagee.

Land tax overdue or about to be? Send us the notice and the property details and we’ll set out the options.

Land tax due and the plan isn’t working? See if you qualify

An enquiry comes with no credit check, and your details stay with one direct lender instead of being passed around. A specialist reads your situation and replies personally. Our lending partner fundU, the direct lender behind this site, assesses the property itself.

Tell us the assessment amount, any arrears, what each property is worth in your estimate and what’s owing on it. Precise numbers at the start are how you get an answer that holds up. Start your enquiry.