The tortoise was bred in captivity at Perth Zoo in 1990 and released into the wild at the Twin Swamps Nature Reserve, but had not been seen by researchers since 2010.
The western swamp tortoise is Australia’s most endangered reptile.
Department of Parks and Wildlife officer Karen Smith said the discovery at the Gidgegannup house was “massively significant”.
“There are only approximately 50 adults of this species remaining in the wild. So to find someone illegally keeping it in captivity, it’s a massive find,” she said.
“The western swamp tortoises were feared to be extinct for over 100 years.
“To identify new specimens is hugely important to try and get them back into wild populations.”
Police alerted wildlife authorities after finding the 26-year-old male tortoise, along with a wild oblong turtle and a blind snake.
“It was being kept as a pet but endangered species do get poached and they do get sold, so there is a chance it was definitely being used in an illegal market,” Ms Smith said.
The tortoise will go to Perth Zoo for a veterinary check before being released back into the wild.
Perth Zoo has released about 600 of the species into the wild but the survival rate is very low.
Earlier this month, authorities re-homed 24 juvenile western swamp tortoises that were bred in captivity at the zoo to an area near the South-West towns of Northcliffe and Augusta to see how they adapted to a colder, wetter environment.
They will be monitored over the next year.
The man who was found in possession of the tortoise may face charges under the Wildlife Conservation Act.