KEY TAKE OUTS:
- What is Land Tax?
- Changes to the principal place of residence exemption
- How is Land Tax calculated?
- 2024 Land Tax thresholds
- Common misconceptions 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. Notwithstanding this, your principal place of residence is usually exempt and not taken into consideration when determining your land tax liability.
- Do you own more than one property?
- Have you acquired a property in the last 12 months?
- Do you own property and are about to purchase another?
You better read on…
Changes to the principal place of residence exemption
From 1 February 2024, if you own and occupy a property but own less than a 25% interest in it, you will not be entitled to the principal place of residence exemption from the 2025 land tax year onwards.
For example, you own a property with your parents and 2 siblings as tenants in common in equal shares (i.e. each of you owns a 20% share of the property). You live in the property. You don’t pay land tax. From the 2025 land tax year, you may then be liable to pay land tax on the property you hadn’t in the past.
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, then 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: $88,036 plus 2% of the land value above the threshold
If you are a foreign person, in addition to any land tax you may be required to 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 the surcharge. Despite this, certain VISA holders are eligible for exemptions or concessions from surcharge land tax.
Revenue NSW has an online calculator which you can use for free to estimate the amount of your land tax liability and surcharge, if applicable. The calculator is available here.
Your liability for each year is based on the value of all the land you owned on 31 December in the previous year. As such, any changes to the land you own this year (sale of an existing property or purchase of another property) will only affect how much you pay next year.
2024 Land Tax thresholds
The Land Tax thresholds for 2024 have been announced as follows:
- General threshold: $1,075,000
- Premium threshold: $6,571,000
The general threshold for 2024 has increased by $106,000 from 2023. The general threshold for 2023 was $969,000. The premium threshold for 2024 has increased by $646,000. The premium threshold for 2023 was $5,925,000.
On or before the first Friday of December each year, the Land Tax thresholds for the following year are announced. This changed recently. This information used to be announced in October, so earlier in the year.
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 2023 value is used for the 2024 tax year. Reminder: the value is based on land only and does not take into consideration any improvements on the land.
What if I sell a property part way through the year?
Land tax is applied for the full year following the taxing date of 31 December and no pro-rata calculation applies nor any refund for the period between selling the property and the end of that calendar year.
Despite this, you may be able to recoup a portion of your land tax from the Purchaser at completion of the sale, if the Contract provides for this. You should discuss this with your Conveyancer when you instruct them to prepare a Contract for the sale of the property.
What do I do if I think I may be liable to pay Land Tax?
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. If you haven’t received a notice of assessment, you can register online or phone Revenue NSW.
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 also to holiday homes and vacant land.
Coutts is here to help
As you navigate Land Tax, remember, that staying informed and prepared is key to managing your property investments effectively. If you’re feeling overwhelmed by the recent changes or unsure about how these laws apply to you, Coutts Lawyers and Conveyancers are here to help.
Need Personalised Advice or Assistance?
- Unsure if you’re liable for Land Tax?
- Need help understanding the 2024 thresholds?
- Want to ensure you’re compliant with the new rules?
Contact Coutts Lawyers and Conveyancers today. Our team of experienced professionals is ready to provide you with tailored advice and support. From understanding exemptions and navigating legal obligations, we’re here to guide you every step of the way.
If you would like further information about Land Tax, please contact 1300 268 887 to book a consultation.
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:
Melina Costantino
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
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.
