- What is Land Tax and how does it work?
- 2023 Land Tax Thresholds
- The most common misconception about Land Tax
What is Land Tax?
Land Tax is an annual tax charged on the land value of all the property you own that is over and above the land tax threshold. The threshold changes each year. Notwithstanding this, your principal place of residence is usually exempt and not considered when determining your land tax liability. Acquired property in the last 12 months? You better read on to see if land tax applies to you.
2023 Land Tax Thresholds NSW
Revenue NSW has recently announced the Land Tax thresholds for 2023. They are as follows:
- General threshold: $969,000
- Premium threshold: $5,925,000
The general threshold for 2023 has increased by $147,000 from 2022. The general threshold for 2022 was $822,000. The premium threshold for 2023 has increased by $899,000. The premium threshold for 2022 was $5,026,000.
How is Land Tax calculated?
Land Tax is calculated on the total value of all your taxable land above the threshold, as of 31 December each year. If the combined value of your land does not exceed the threshold, you do not need to pay land tax.
The thresholds are applied as follows:
- General threshold: $100 plus 1.6% of the land value above the threshold up to the premium threshold
- Premium threshold: $67,364 plus 2% of the land value above the threshold
If you are a foreign person, in addition to any land tax you may already pay, you must also pay surcharge land tax. If you are a foreign person who doesn’t pay land tax, you may still be required to pay surcharge. The surcharge rate is 4% from the 2023 land tax year onwards. Despite this, certain visa holders are eligible for exemptions or concessions from surcharge land tax.
What if I sell a property part way through Land Tax year?
The threshold is applied to land holdings on 31 December each year and is applied for the full year following the taxing date of 31 December. As such, no pro-rata calculation applies nor any refund for the period between selling the property and the end of the calendar year.
Despite this, you may be able to recoup a portion of your land tax liability from the Purchaser if the Contract notes that land tax is adjustable.
How is the land value determined?
Land value is determined by the valuations issued by the Valuer-General to Revenue NSW. The valuation from the previous year is used. For example, the 2022 value is used for the 2023 tax year. Note: the value is based on land only and does not take into consideration any improvements on the land.
What do I do if I think I may be liable to pay Land Tax?
If you haven’t received a notice of assessment, you can register online or phone Revenue NSW.
It is your responsibility to register for Land Tax if the value of all your taxable land is above the threshold. It is not the responsibility of Revenue NSW to notify you that you are required to be registered and/or follow up on payment. This is the case even if you haven’t received a notice of assessment from them.
Failure to register for land tax may result in penalties such as interest charges.
The most common misconception about land tax…
You only have to pay land tax on properties you earn an income from. This is not the case. Land tax applies regardless of whether income is earned from the land and applies not only to investment properties but holiday homes and vacant land.
We are here to help
At Coutts, our experienced team can assist you in understanding your land tax obligations, calculating your liability, and navigating any exemptions or concessions that may apply. Contact us today to ensure you’re meeting your land tax responsibilities effectively.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licenced Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.