Overview of Land Tax in NSW

Land tax is an annual tax levied at the end of the calendar year on property you own that is above the land tax threshold.

Who is responsible for Land Tax?

You may need to pay land tax if you own, either solely or jointly:

Vacant land, including rural areas.
Land with constructed houses, residential units, or flats.
A vacation home.
Investment properties.
Company title units.
Residential, commercial, or industrial units, including parking spaces.
Commercial facilities like factories, shops, and warehouses.
Land leased from state or local government.

Additional Circumstances:

Land tax may also be applicable if you’re classified as a foreign owner for tax purposes, including properties opted into property tax.
For owners not enrolled in property tax opt-in, if the combined value of their land across all properties exceeds the threshold, they must also pay land tax. Further details can be found at https://www.revenue.nsw.gov.au/taxesduties-levies-royalties/property-tax.

Land Tax in NSW

You are required to pay land tax in NSW if the unimproved value of your landholdings exceeds the annual threshold. For the calendar year 2024, the threshold is set at $1,075,000 – $6,571,000.

Tax Rates and Thresholds:

General Threshold: Land tax is calculated at $100 plus 1.6% of the land value exceeding the threshold, up to the premium threshold.
Premium Threshold (2024): Land tax is $88,036 plus 2% of the land value above this premium threshold.

Publication and Timing: The land tax threshold is announced in the government gazette on or before the first Friday of December each year.

Tax Calculation: Land tax is charged annually based on the land value as of 31 December, with no prorated adjustments for partial year ownership.

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Exemptions from NSW Land Tax

Certain categories of land in New South Wales are exempt from land tax to ensure fairness and promote specific uses of land. These exemptions include:

Principal Residence: Your main home is exempt, including up to a six-year absence if you’ve lived there for six months prior. Renting out the home for up to six months per year won’t affect this exemption. A partial exemption is possible if the home is only partly used as a residence.

Primary Production Land: Land used for farming or similar activities is usually exempt. If not zoned rural, it must be actively used in primary production to qualify.

Charitable and Non-Profit Owned Land: Properties owned by charitable, religious, educational, and non-profit organisations are generally exempt, especially if used for low-cost accommodation.

Common Causes for Land Tax Liability: Owning residential or commercial properties with values above the land tax threshold typically triggers liability.

Special Trusts and Companies: Properties held by “special trusts” or non-concessional companies do not meet the standard exemption threshold. Trust deeds must contain specific clauses set out by the Office of State Revenue to qualify. Consulting a solicitor when setting up such trusts can prevent unexpected tax bills.

Land Tax Reporting Requirements in NSW

If you own land in NSW that is not exempt from land tax, you must:

Register for Land Tax: Do this as soon as you acquire any non-exempt land.
Update on Transactions: Notify the Office of State Revenue of any purchases or disposals of non-exempt land throughout the year.

Assessment Period:

The land tax year aligns with the calendar year, running from 1 January to 31 December.
Assessments are based on your land holdings as of 31 December of the previous year.

Valuation and Tax Liability:

The unimproved value of your land is assessed by the governing body, which determines your
land tax liability.
Annual land tax assessments are issued to you by the Office of State Revenue.

Disposals and Adjustments:

If you sell non-exempt land during the year, you won’t receive a direct refund for any land tax paid. Instead, the land tax for the portion of the year the land was under your ownership is usually adjusted during settlement with the buyer.

These requirements ensure you remain compliant with NSW land tax regulations and help manage your financial responsibilities effectively.

WHAT’S NEXT?

If you own a property in NSW that is not your principle place of residence, contact Thrive Advice on 02 6362 8255 or reach out to us at hello@thriveadvice.com.au to discuss how Land Tax could potentially impact you.