HOMELand tax
Who pays land tax?
You may have to pay land tax if you own, or jointly own:
vacant land, including rural land
land where a house, residential unit or flat has been built
a holiday home
an investment property or properties
company title units
residential, commercial or industrial units, including car spaces
commercial properties, including factories, shops and warehouses
land leased from state or local government.
Land tax applies regardless of whether income is earned from the land.
Generally, you do not pay land tax on:
your home, known as your principal place of residence
your farm, known as primary production land
any land you own with total taxable value below the land tax threshold.
How land tax is calculated
Land tax is calculated on the total value of all your taxable land above the land tax threshold, not on each individual property. If the combined value of your land does not exceed the threshold, no land tax is payable. Your liability for each year is based on the value of all land you owned on 31 December in the previous year. Any changes to the land you own this year will only affect how much you pay next year.
How land is valued for land tax
Every year, the Valuer General determines the value of all land in NSW at 1 July each year.
Land value is the unimproved value of your land.
The taxable value of each parcel of land is determined on the average value from the current year and the two past years, where applicable.
When a parcel of land has been created less than three years ago – for example, through a subdivision or amalgamation – we only consider the years after it was created.
Trusts
A trust is an arrangement where a trustee manages or holds a property for the benefit of one or more individuals or organisations (known as a beneficiary).
The trustee has a duty to the beneficiaries, who are the ‘beneficial’ owners of the trust property.
You’re considered to be the owner of the interest in the trust if you’re a beneficiary or unit holder in a fixed or family unit trust.
When calculating your land tax liability, you must consider the value of your interest in the account.
A trust may be liable for land tax and/or surcharge land tax.
You may be able to reduce the amount you pay by claiming the land tax threshold, depending on the type of trust.
You must register your trust for land tax and provide the following information:
a copy of the stamped trust deed, or
probate of a will and the beneficiaries' details, and
the foreign person status of the trust.
Exemptions and concessions
You may be eligible for a land tax exemption depending on how you own and use your land. Exemptions which may apply include:
Principal place of residence
Primary production land
Boarding house
Low cost accommodation
Residential and caravan parks
Retirement villages
Childcare centres
Under the Taxation Administration Act 1996, we may impose penalties for providing misleading and/or false information, or for deliberately avoiding our requests for information. We conduct investigations and compliance checks to ensure that exemptions are only granted to those clients who are entitled to receive them. Under reciprocal power arrangements we are also able to obtain information from the Australian Taxation Office (ATO) for the purposes of land tax administration.
Principal place of residence
You can claim an exemption for land that you use and occupy as your principal place of residence (your home).
The general requirements of this exemption are that you must: .
1 only claim one exemption per family
2 have continuously used and occupied the property solely for residential purposes before the taxing date
3 have used the land for residential purposes
4 be a natural person. The exemption does not apply to land owned partly or wholly by a company or held in a Special Trust.
When applying for the exemption you may need to provide supporting documents such as but not limited to:
1 electricity bill showing usage
2 gas bill showing usage
3 home and contents insurance policy
Council land rates and water rates are not acceptable documents as these do not demonstrate you reside in the property.
Different types of principal place of residence concessions (more information below):
1 moving between homes
2 building or renovating before moving in
3 living away from your home
4 deceased estate
5 owning through a company or trust
6 renting out a portion of your home
7 using your home for business
8 mixed-use properties
9 other.
Moving between homes
If you bought a new residence and still owned your previous home on 31 December in the last calendar year, you may be eligible for a land tax concession on both properties.
To qualify, you must:
1 have taken ownership between 1 July and 31 December in the previous calendar year
2 start living in the new home before 31 December the following year
3 only use the new property as your principal place of residence, unless tenants occupied the home under an existing lease when you took possession.
Also, you must have been the only residents of your previous property up to 1 July in the previous calendar year and can’t have earned any income from it, except from:
1 a permitted occupancy
2 a contract the buyer entered into before settlement as part of the sale – e.g. the property is leased to tenants.
Building or renovating before moving in
From the 2017 tax year, if you plan to build or renovate, you can claim the concession for four years after you take ownership. If tenants or others occupy the home when you become the owner, you can only claim the concession once they move out.
To qualify:
1 you must live in the property continuously for at least six months once construction is complete
2 you can’t generate any income from the property once construction or renovations begin
3 you and any others can only use the land for legal purposes
4 the land mustn’t have the option to build more than two residences or residential units under local planning laws, including when combined with adjoining land
5 you or another family member must not own and occupy another principal place of residence.
Living away from your home
You may be able to claim an exemption if you move out of your main residence and live in a residence you don’t own. You can claim the exemption for up to six years, or up to four years if you can’t live on the land – e.g. due to renovation.
To qualify, you must:
1 have lived there continuously for at least six months before moving away
2 not own another principal place of residence
3 only earn income from the property to cover basic property expenses, such as rates, water and other amenities
4 not lease out your property for longer than six months in a calendar year - If you lease out your property for longer than six months, you must pay land tax in the following year, unless you move back into the home before 31 December.
Deceased estate
When someone dies, their home will be exempt from land tax, either:
1 until ownership is transferred to someone else, apart from their personal representative or a beneficiary of the estate, or
2 for two years after the date of death.
If someone still lives in the property, it’s exempt from land tax if the occupant:
3 is allowed to live there according to the legal will of the person who has died, or
4 isn’t a tenant but occupied the property when the owner died and has been given permission to continue living in the home by the personal representative of the person who died.
Owning through a company or trust
If you own the home you live in through a trust or company, you must pay land tax if:
1 the land is owned by a company or owned jointly with a company, unless the company is a ‘trustee company’, or a company acting as trustee of a concessional trust.
2 you only own the land because you’re a trustee
3 the land is owned by a trustee of a special trust.
Renting out a portion of your home
If you let out part of your home and receive income, you can still claim the exemption so long as the leased part of your property is:
one room
one suite of rooms
one flat
one suite of rooms and one room
one flat and one room, or
two rooms, occupied by two different tenants.
If you lease more of your home, you may be eligible for a partial exemption.
Using your home for business
If you conduct some business at home, you might need to pay land tax for the proportion of the property used for work.
You don’t have to pay land tax if you primarily conduct your business somewhere else and only one room in your home is sometimes used for work - e.g. a home office or workshop.
Mixed-use properties
Some uses of land are exempt from land tax, or eligible to a concessional rate.
Where land is partly used as the principal place of residence of the owner and partly used for other non-exempt purposes (beyond what is permitted in Schedule 1A Clause 5 - land used for incidental business purposes) it is still possible to claim a reduction in land tax for the portion of the property that is used as the PPR. The taxable land value will be reduced by an allowable proportion.
Other types of exemptions
Primary production land
Your land may be exempt from land tax if:
1 it’s zoned rural, rural residential or non-urban
2 it’s mainly used for primary production and you sell the resulting product.
Primary production can include:
3 maintaining animals for their natural increase, or to sell them or their bodily produce
4 cultivating crops to sell
5 keeping bees to sell honey
6 growing flowers, orchids or mushrooms to sell
7 commercial fishing and commercial farming of fish or oysters.
Commercial plant nurseries may also be exempt, but not if the main activity is maintaining plants to sell the public.
The exemption applies even if someone who’s not the owner uses it for primary production.
Land that isn’t zoned rural, rural residential or non-urban may still be exempt, if you can demonstrate the main use is primary production and:
1 it has a significant commercial purpose or character
2 the level of activity is enough to conduct a business, not just a hobby
3 the activity is carried out with the intent to make a profit on a continuous or repetitive basis, regardless whether a profit is made.
Primary production is assessed based on activity undertaken on 31 December each year.
We may consider some activity before or after 31 December, especially if the land is currently fallow or in drought.
You should support your claim with:
1 financial records
2 national livestock identification scheme information
3 returns or evidence lodged with relevant authorities
4 evidence of sales or expenditure
5 a plan of the property.
To find out if you’re eligible for the exemption, see the revenue ruling land used for primary production.
Boarding houses
Your boarding house is exempt from land tax if during the previous year:
1 at least 80 per cent of occupants were long term
2 you didn’t charge more than the maximum tariffs for that year.
To find out if you’re eligible for the exemption, see the revenue ruling land used and occupied primarily for a boarding house.
To apply for this exemption online, you will need the following information:
1 Date registered with Fair Trading
2 percentage of land used as a boarding house, or assisted boarding house
3 Boarding house tenancy details including:
Total number of rooms, suites or beds available to boarding house residents
Number of rooms, suites or beds occupied by long term residents
Whether tariffs charged were more than maximum tariffs specified in the applicable revenue ruling
You need to apply for this exemption annually.
Low cost accommodation
Your Land is exempt from land tax if it’s used for low cost accommodation and is within 5km of the Sydney General Post Office (GPO). Use our interactive map to see if your property meets the criteria.
To find out if you are eligible for the exemption, see the revenue ruling land used and occupied primarily for low cost accommodation.
To apply for this exemption online, you will need to provide details of your tenancy agreements.
You need to apply for this exemption annually.
Residential and caravan parks
If you own a residential or caravan park mainly used as a home for retirees, you may be eligible for a full or partial land tax exemption.
To find out if you’re eligible for the exemption, see the revenue ruling residential parks primarily used and occupied by retired persons.
Non-profit organisations
Land may be eligible for exemption if it’s owned or held in trust by a non-profit organisation, including:
a charity
an educational institution
a religious organisation.
To qualify, your organisation:
must only have a charitable, educational or religious purpose, such as caring for aged or unwell clergy, or ministers and their wives, widows or children
must not carry out business for the profit of its members.
To qualify for this exemption, you must outline your organisation’s regulations, rules and objectives, and prove that income can’t be distributed to members.
You’ll need to provide:
financial statements for the last two years
your latest annual report
your organisation’s constitution, or a copy of the memorandum and articles of association
evidence that there can be no distribution to members if the organisation is wound up.
Retirement villages, aged care establishments and nursing homes
Retirement villages, nursing homes and aged care establishments currently operating and occupied are exempt from paying land tax.
To find out if you’re eligible for the exemption, see the revenue ruling exemption for retirement villages and nursing homes.
When applying for the exemption you may need to provide supporting documents.
Acceptable documents may include:
Copy of Development Approvals issued by appropriate Authorities (Council or NSW Planning Authority);
Copy of Approved Plans (Council or NSW Planning Authority);
Copy of Occupation Certificate (Council or NSW Planning Authority)
Copy of relevant approval to provide aged care under Section 8-1 of the Age Care Act 1997 (Council or NSW Planning Authority)
Childcare centres
Land used entirely as a childcare centre may be eligible for an exemption. Types of services include:
long day care services
family day care services
outside school hours services
preschool programs including those delivered in schools.
To qualify, your organisation must be an educational or child care service, as defined by the Children (Education and Care Services) National Law (NSW).
This exemption doesn’t apply to vacant land, or land where the centre is under construction, even if intended for a childcare or education facility.
You must include a copy of your service approval letter with your application.
Crown or council land
Crown land is leased land, owned and managed by state government, for which the Crown is liable for land tax.
Council land is owned and operated by the local council.
Land is exempt from land tax if:
the term of the lease is less than 12 months, including any period under an option
the lessee is the Crown, a local or county council, or a public authority
the lease was entered into before 1 January 1987 and the terms of the lease relating to rental payable remain unchanged (for land leased from the Crown only)
the lease was entered into before 1 January 1991 and the terms of the lease relating to rental payable remain unchanged (for land leased from local and county councils, and NSW public authorities only).
Societies, Clubs and Associations
Land containing a building used for a society, club or association is exempt from land tax provided:
a society, club or association is not carried on for the pecuniary profit of its members
no part of the building is used for the purpose of a commercial activity open to members of the public.
The land may include car parks solely used by the members of the society, club or association.
To support a claim for exemption, the following must be provided:
A copy of the constitution and/or a copy of the memorandum and articles of association and any amendments
A copy of the society, club or association’s financial statements for the last two years
A copy of the latest annual report
A copy of the trust deed (where land is held in trust)
Surcharge land tax
The following visa holders are exempt from surcharge land tax on their principal place of residence if they occupy their home for a continuous period of 200 days in the current land tax year:
permanent visa holders
New Zealand citizens, who hold a special category visa (subclass 444)
partner (provisional) visa holders (subclass 309 or 820)
holders of retirement visas (subclass 410 and 405)
You must apply for the exemption by 31 March in the relevant tax year.
The exemption doesn’t apply to the 2017 tax year.
Foreign Owner Surcharge land tax
If you're a foreign person who owns residential land in NSW, you must pay surcharge land tax in addition to any land tax you may already pay. You may be required to pay surcharge even if you do not pay land tax.
You’re generally considered a foreign person, unless:
1 you're an Australian citizen; or
2 you've lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December, and you're:
a permanent resident of Australia, or
a New Zealand Citizen, who holds a subclass 444 visa.
You must pay surcharge on the taxable value of all residential land that you own as at 31 December each year. There is no tax-free threshold applicable to surcharge.
The surcharge rate is:
1 0.75 per cent from the 2017 land tax year, and
2 two per cent from the 2018 land tax year onwards.
Surcharge is assessed in relation to each parcel of residential land and is proportional to ownership.
There are no joint assessments and secondary deductions don't apply.
A principal place of residence exemption may apply to you from the 2018 tax year. It applies for one year and one residential property. Residency requirements must be met.
Land tax payment methods
How to pay land tax
When you receive your land tax assessment notice it provides you with the option of three instalment dates.If you pay in full by your first instalment date, you will receive a 1.5 per cent discount (excluding past interest or penalties).
If you chose to pay your land tax in three instalments, each instalment will fall due one month after the last. If you do not pay an instalment on time, the total amount owing becomes due and you may be charged additional interest.
Your first instalment will include any overdue amounts, interest or penalties (if any).
Extended payment plans
If you have no overdue land tax amounts you can opt in via our online services to pay your land tax over an interest free six month period. The payment plans can be set up with monthly or fortnightly payments.
If you miss or make a late payment, the plan will be cancelled, and interest may be applied.
Set up a payment plan
If you have overdue land tax, you can apply for a payment plan to extend your payment dates. These plans may include interest.
Contact us if you need more information or if you’re experiencing serious financial hardship.
Late payments
If you do not pay your land tax on time and have not set up a payment plan or contacted us to make another arrangement, you will be charged interest at a premium rate on what you owe, plus additional interest at a market rate (adjusted quarterly).
Apply for a refund
If you have overpaid your land tax, or your assessment notice shows you’re in credit, complete the online form to request a refund.
Review your account
View your balance, check current land holdings, update your contact details and more.
