Don't have an account? Create one now
Partners for Climate Protection

Land value taxation

Land value taxation (LVT) is a value-based property tax that is levied only on the land, and disregards the value of improvements such as buildings, infrastructure and landscaping. LVT is designed to encourage more efficient land uses, such as infill development and densification. Most Canadian municipalities base property taxes on the value assessment of buildings on the land, rather than the land itself.

Owners who make improvements to their homes or businesses that increase the value of those buildings will see increases to their property taxes. Split-rate taxation is a combination of LVT and regular property taxes that considers the land value and the improvements separately, and assigns more weight to land value within the tax calculation. LVT can discourage inefficient and unproductive land use, while encouraging densification and infill development.


Roads, water distribution, sewage collection and treatment, parks.


  • Discourages land use speculation.
  • Encourages more efficient land use.
  • Split-rate taxation can benefit low-income homeowners and small business owners, and keep rents lower.

Barriers and challenges

  • Can lead to gentrification and diminish the affordable housing supply.
  • Tax level is not necessarily related to the level of services received.
  • Can be difficult to determine land value separate from the value of improvements.
  • If a split-rate taxation is used, the costs of reprogramming software used for calculating tax rates should be taken into account.

Resources and notes

Municipal examples

  • Harrisburg, PA, adopted a split tax rate in the 1970s that has generally translated into lower taxes for most landowners and higher taxes for those who use land unproductively.
  • Edmonton, AB, instituted a plan in 1904 to exempt all buildings from property tax consideration, which helped shape Edmonton's dense downtown core. In 1918, after World War One, the city instituted a 60% tax on the value of buildings, instead of increasing the tax on site value.

Page Updated: 18/09/2015