Last reviewed: May 2026 · Financial year: 2025–26 · Authority: Cross-referenced against ATO Rental Properties Guide 2025 (NAT 1729), SRO Tasmania published rates and rulings, and current draft TR 2025/D1.

TL;DR for Tasmanian investors in 2025–26:
- TAS land tax kicks in at $124,999.99 (raised from $99,999 effective 1 July 2025) — a meaningful 2025 update many guides haven't caught up with.
- Just two rate brackets above the threshold — Tasmania has the simplest land tax structure in Australia.
- 2% Foreign Investor Land Tax Surcharge for residential land that is not used as a principal place of residence.
- Stamp duty has the lowest top marginal rate in Australia at 4.5%. Foreign Investor Duty Surcharge of 8% applies (effective 1 April 2020) — plus a 1.5% surcharge for primary production land.
- New home rental exemption — properties with first occupancy permits issued between 8 February 2018 and 30 June 2026 may qualify for up to 3 years of land tax exemption when used as long-term rentals.
- Short-term-to-long-term conversion rebate — 1-year exemption when converting Airbnb to long-term rental, extended to 30 June 2026.
- Negative gearing remains legal and unrestricted in 2025–26.

Tasmania's property market has been one of Australia's strongest growth stories of the last decade — Hobart capital values doubled between 2016 and 2022. The state's response has been to use targeted tax exemptions to encourage long-term rental supply, while keeping the underlying land tax structure simple and the rates moderate.

This guide covers every legitimate deduction available to a Tasmanian property investor in 2025–26, the Tasmania-specific rules that affect those claims, and the four ATO compliance traps to avoid before lodging.

Why Tasmania is different

The TAS-specific things that affect your return outcomes:

Threshold raised to $125,000 in 2025. Effective 1 July 2025, the tax-free threshold rose from $99,999 to $124,999.99. Many sources still cite the older figure (some still cite $87,000 from earlier years) — the current threshold is $125,000.

Land tax assessment date is 1 July. Unique to Tasmania. NSW/VIC use 31 December; QLD/WA/SA use 30 June.

Just two rate brackets. 0.45% on land between $125,000 and $499,999; 1.5% on land above $500,000. This makes Tasmanian land tax genuinely the simplest to model in the country.

Foreign Investor Land Tax Surcharge — 2% for residential land not used as a principal place of residence. Plus a 1.5% surcharge for primary production land.

Foreign Investor Duty Surcharge — 8% on stamp duty, effective 1 April 2020.

Targeted exemptions to encourage long-term rentals:

- New home rental exemption — up to 3 years of land tax exemption for properties with first occupancy permits 8 Feb 2018 – 30 June 2026 used as long-term rentals - Short-to-long conversion exemption — 1 year of land tax exemption when converting from Airbnb to long-term rental (extended to 30 June 2026)

These exemptions are unusual — most Australian jurisdictions don't actively use the tax system to encourage long-term rentals. Tasmanian investors can save material amounts by understanding which exemptions they qualify for.

Part 1: Common deductions every Tasmanian investor can claim

1 July 2025 threshold raise

Who benefits from the new $125,000 Tasmanian threshold

TAS investors by taxable land value, with the old threshold ($99,999) and new threshold ($125,000) marked. The orange band is now exempt.

What this means

Approximately 10% of Tasmanian investors who were paying land tax under the old $99,999 threshold became fully exempt on 1 July 2025 when the threshold rose to $125,000. Many published guides still cite the older figure (or the much older $87,000 from earlier years) — current is $124,999.99.

These deductions are governed by the Income Tax Assessment Act 1997 and the ATO's Rental Properties Guide 2025. The property must have been rented or genuinely available for rent during the period the expense was incurred.

1. Loan interest

Interest on the loan used to acquire your Tasmanian investment property is fully deductible. Redraw for private purposes is the biggest trap (Part 4).

2. Property management fees

Hobart and Launceston PM fees typically run 7–9.5%. Regional Tasmania can be higher. All recurring management fees, letting fees, and inspection charges are deductible.

3. Council rates

Local government rates from your TAS council (Hobart City, Glenorchy, Clarence, Kingborough, Launceston, Devonport, Burnie, etc.) are fully deductible.

4. Water rates and usage

TasWater issues bills with supply and usage components. The supply charge is generally a landlord cost; usage typically passes to the tenant. Whatever the landlord pays is deductible.

5. Insurance premiums

Landlord, building, and contents insurance — all deductible. Premiums include stamp duty and GST — both deductible.

6. Repairs and maintenance

Repairs that restore the property to its previous condition without improving it are immediately deductible. The repair vs improvement distinction is heavily audited (Part 4).

7. Body corporate / strata fees

Quarterly admin fund and reserve fund contributions are immediately deductible. Special levies for ordinary maintenance are deductible. Special levies for capital improvements form part of your Division 43 base.

8. Land tax

TAS land tax is fully deductible. Covered in detail in Part 2.

9. Advertising for tenants

Listings, photography, signboards, internal PM marketing fees — all deductible.

10. Legal expenses

Deductible: evicting tenants, recovering unpaid rent, lease preparation in some circumstances. Not deductible — but added to CGT cost base: conveyancing, title disputes.

11. Stationery, phone, internet (rental portion)

Costs related to managing the rental are deductible to the extent they relate to producing rental income.

12. Quantity surveyor fees

Fully deductible. Covered in Part 3.

13. Tax agent fees (rental portion only)

Portion related to preparing the rental schedule is deductible.

14. Pest control

Routine pest control between tenancies and termite inspections are immediately deductible.

15. Cleaning and gardening

End-of-tenancy cleaning, routine cleaning, lawn mowing, gardening — all deductible.

16. Bank fees and loan costs

Loan establishment, valuation, and LMI are borrowing costs — deducted over 5 years or the loan term. Annual loan account-keeping fees are immediately deductible.

17. Travel to property — heavily restricted

Non-deductible since 1 July 2017 for individual investors with residential property. This is particularly relevant for Tasmania because a high proportion of Tasmanian investment properties are owned by mainland investors who would historically have travelled for inspections. There is no workaround for individuals other than a corporate structure.

Part 2: TAS Land Tax — the rules that actually matter

2.1 Land tax

Levied by the State Revenue Office (SRO) Tasmania annually, based on the assessed land value at midnight on 1 July. Your principal place of residence is exempt.

2025–26 thresholds and rates (effective 1 July 2025)

Total taxable land value	Land tax payable
Up to $124,999.99	$0
$125,000 – $499,999	$50 + 0.45% of value above $125,000
$500,000 and above	$1,737.50 + 1.50% of value above $500,000

Source: SRO Tasmania, Land tax 2025–26 guideline, threshold raised to $124,999.99 effective 1 July 2025.

Worked example: A Hobart investor with $300,000 of taxable land value pays $50 + ($175,000 × 0.45%) = $50 + $787.50 = $837.50 for the year. Effective rate on the total value: ~0.28%.

2.2 Foreign Investor Land Tax Surcharge — 2%

Foreign investors pay an additional 2% surcharge on residential land that is not used as a principal place of residence and was acquired on or after 1 July 2022. Plus a separate 1.5% surcharge for primary production land.

This is a more targeted regime than NSW (5% on all foreign-owned residential) or VIC (4% absentee surcharge with no threshold). Tasmania's approach distinguishes between residential investment and PPOR use.

2.3 Targeted exemptions (Tasmanian-specific)

Tasmania uses the tax system to encourage long-term rental supply — unusual among Australian jurisdictions. Worth understanding because the savings are material:

New home rental exemption. A residential property with a first occupancy permit issued between 8 February 2018 and 30 June 2026 that is used as long-term rental accommodation may qualify for a land tax exemption for up to 3 financial years.

Short-term-to-long-term conversion. A 1-year land tax exemption is available where short-term visitor accommodation (Airbnb, Stayz) is converted to long-term residential rental. Extended to 30 June 2026.

Special disability trusts. A zero land tax rate may apply where the trust beneficiary occupies the property as their principal place of residence.

Two residences transitional rebate. When you purchase a new PPOR before selling your existing one, a rebate may be available so both properties qualify as principal residence land during the transition period.

These exemptions are not automatic — you have to apply. SRO Tasmania publishes the application criteria.

2.4 When are TAS land tax assessments issued?

SRO Tasmania typically issues assessments from late August through October following the 1 July assessment date.

2.5 Is land tax deductible?

Yes — fully deductible against rental income in the year incurred.

2.6 Common Tasmanian land tax mistakes

Outdated threshold assumption. Many guides still cite $87,000 or $99,999 as the TAS threshold. The current figure is $124,999.99 effective 1 July 2025. Use the current figure when modelling.

Missing the new home exemption window. If you own a property with a first occupancy permit between 8 February 2018 and 30 June 2026, used as a long-term rental, check eligibility for the up-to-3-year exemption. The window is closing for new permits.

Foreign surcharge surprise. The 2% foreign surcharge applies to residential land acquired on or after 1 July 2022. Investors with pre-2022 holdings sometimes incorrectly assume the surcharge applies to them.

Part 3: Depreciation

Federal rules apply uniformly across all states.

Division 43 — Capital Works

Buildings constructed after 15 September 1987
2.5% per year of original construction cost
40 years from completion

Division 40 — Plant and Equipment

The May 2017 change still applies: individuals can't claim Division 40 on existing plant in second-hand residential properties acquired after 7:30pm AEST on 9 May 2017. Brand new properties: full claim. Second-hand: only on plant you install yourself. Companies are exempt; SMSFs and family trusts are not.

For Tasmanian investors, this rule has shaped buying behaviour particularly in Hobart's new apartment developments and in growth corridors like Sorell, Brighton, and the northern suburbs.

Always commission a depreciation schedule unless your property is pre-1987 with no significant renovations. National QS firms operate in Tasmania — BMT, Washington Brown, Capital Claims, and Duo Tax all service the state.

Part 4: The four ATO compliance traps to avoid in 2025–26

Trap 1: Loan redraws for private purposes

The biggest trap. ATO sees this through bank data matching 2021–22 to 2025–26. Use offset accounts instead of redraw for any liquidity needs.

Trap 2: Repairs vs improvements

Repairs (immediate deduction) restore to previous condition. Improvements (capital, claimed over 40 years) upgrade beyond previous condition. Initial repairs (fixing damage that existed at purchase) are not immediately deductible — they form part of CGT cost base.

Trap 3: Genuinely available for rent

Particularly relevant for TAS holiday rentals (East Coast, Bruny Island, Strahan, Cradle Mountain area). PCG 2025/D7 specifically addresses holiday homes.

Trap 4: Travel claims

Non-deductible since 1 July 2017 for individual investors. Particularly catches mainland investors with TAS properties who used to fly down for inspections.

Part 5: Stamp duty in Tasmania

Stamp duty is a one-off cost paid at purchase — not annually deductible. Forms part of the CGT cost base.

Standard rates 2025–26

Tasmania has the lowest top marginal rate in Australia at 4.5% on amounts above $725,000.

For typical investment purchases:

$500,000 property → ~$18,247 duty
$750,000 property → ~$28,935 duty
$1,000,000 property → ~$40,185 duty

Foreign Investor Duty Surcharge — 8%

Foreign buyers pay an additional 8% surcharge on residential property (effective 1 April 2020). For primary production land, the surcharge is 1.5%.

A foreign buyer purchasing a $1M Tasmanian property pays:

Standard duty: ~$40,185
8% foreign surcharge: $80,000
Total: ~$120,185

When to pay

Stamp duty is payable at settlement. Conveyancers handle this through SRO Tasmania.

CGT cost base treatment

Do not claim stamp duty as an annual deduction. Record it as part of the CGT cost base.

Part 6: CGT considerations for Tasmanian investors

CGT is federal — same rules everywhere.

The 50% CGT discount for individuals and trusts (not companies) on properties held for more than 12 months.

Cost base includes purchase price, stamp duty, legal fees, building/pest inspection, buyer's agent fees, capital improvements (less Division 43 already claimed), and selling costs.

Negative gearing remains legal and unrestricted in 2025–26.

For Tasmanian investors who bought during the 2016–2022 growth cycle and are sitting on substantial unrealised gains, take CGT timing advice before selling. The 50% discount is the single biggest tax concession available, and timing the sale correctly relative to other income can materially affect the after-tax outcome.

Part 7: Record keeping that will survive an ATO review

Five years from lodgement for income/expense records. The entire ownership period plus five years after sale for CGT.

For Tasmanian investors specifically, keep:

Property manager statements
Bank statements showing rental income
Records of bond money retained
Records of any short-term rental income
Every invoice and receipt
Photos before and after for repairs
Annual loan statements and redraw records
Full QS depreciation schedule
Receipts for any new plant and equipment installed
Receipts for any capital improvements
SRO Tasmania land tax assessments
Documentation supporting any TAS-specific exemption claims (new home rental, short-to-long conversion)
Stamp duty receipts (entire ownership period — CGT cost base)
Strata notices and minutes
Council rates notices

Tracking your Tasmanian deductions automatically

Propperly's free Tax Centre helps you:

Capture every deductible expense as it happens
Categorise to the exact ATO category
Track TAS land tax against the (recently raised) $125,000 threshold
Flag eligibility for TAS-specific exemptions
Load your depreciation schedule once
Generate a clean EOFY summary
Flag the four ATO compliance traps before they become a problem

Get started with Propperly's free Tax Centre →

Frequently asked questions

What's the current TAS land tax threshold?

$124,999.99 effective 1 July 2025 — raised from $99,999. Many guides still cite the older figure.

Is TAS land tax really deductible?

Yes. Standard deductible holding cost.

What's the foreign investor stamp duty surcharge in TAS?

8% on residential property (effective 1 April 2020). 1.5% for primary production land.

What's the foreign land tax surcharge in TAS?

2% for residential land not used as a PPOR, acquired on or after 1 July 2022.

What's the new home rental exemption?

Up to 3 years of land tax exemption for properties with first occupancy permits issued between 8 Feb 2018 and 30 June 2026, when used as long-term rental accommodation.

Can I get an exemption for converting from Airbnb to long-term rental?

Yes — a 1-year land tax exemption is available, extended to 30 June 2026.

When is TAS land tax assessed?

Midnight 1 July — unique to Tasmania.

Can I claim depreciation on a second-hand Hobart property bought in 2024?

Division 43 capital works: yes (if built after 15 September 1987). Division 40 on existing fittings: no — May 2017 change applies. Division 40 on anything new you install: yes.

Can my SMSF claim Division 40 on existing plant in a second-hand property?

No. SMSFs and family trusts are not exempt from the May 2017 change.

Is negative gearing still legal in 2025–26?

Yes.

How long do I keep records?

Five years from lodgement for income/expense records. The full ownership period plus five years after sale for CGT records.

Related resources

TAS Land Tax Calculator → TAS Stamp Duty Calculator → CGT Calculator → Depreciation Estimator →

Other state guides:

Sources

ATO, Rental Properties Guide 2025 (NAT 1729)
ATO, draft TR 2025/D1, PCG 2025/D6, PCG 2025/D7
ATO, TR 2000/2 (deductibility of interest)
ATO, TR 2023/2 (effective life of depreciating assets)
SRO Tasmania, Land tax 2025–26 guideline
SRO Tasmania, published rates and exemptions 2025–26
Income Tax Assessment Act 1997
Land Tax Act 2000 (Tas)
Duties Act 2001 (Tas)
Treasury Laws Amendment (Housing Tax Integrity) Act 2017

General information only — not personal financial, taxation, or legal advice. Consult a registered tax agent for advice specific to your circumstances. Last reviewed: May 2026.

Investment Property Tax Deductions Tasmania 2026 | Propperly