While the Australian taxation system can be hard to understand, we are here to dissect the criteria for land taxation in New South Wales, help you learn how to calculate it, and most importantly, teach you how to pay for it.
Read on as we answer “ How much is a land tax in NSW?” and much more.
Who Pays Land Tax in NSW?
The annual land tax is paid to your state or territory government in Australia if you own a property. The land tax is levied at the end of the calendar year for every property valued above the specified land tax threshold. Nevertheless, there are exceptions to land taxes, and they include owners with property located in the Northern Territory.
Every fully or co-owned possession in New South Wales is subject to land taxation, whether it is vacant land purchased for building or land that already has an existing property. However, Australian properties with the status of the principal place of residence are typically released from paying taxes.
So, who pays a land tax in NSW?
Firstly, your eligibility for paying land taxes in New South Wales doesn’t depend on whether you earn money from the land or not. Instead, a land tax in NSW is obligatory for Aussies who jointly or independently possess:
- Vacant land (rural lands included);
- Land with a built house, residential unit or flat;
- Holiday home;
- Investment property;
- State or local government leased land;
- Company units;
- Commercial properties.
Now that we’ve got that covered, let’s see who is eligible for land tax exemption and concessions in New South Wales.
Land Tax in NSW: Exemptions and Concessions
There are some ways you can save on tax, as there are several exemptions to paying land taxes in New South Wales. The exemption criteria fall under two factors – ownership and use of the land. Let’s go over each property type and see what it implies.
- Principal place of residence as an exemption for land tax can be claimed only once per family, and the land must be used for residential purposes for an uninterrupted period.
- Primary production land including a zoned rural, a rural residential, or a non-urban property used for production and selling of the final product.
- Boarding house with at least 80% long-term occupants.
- Low-cost accommodation if it’s located 5km around the Sydney General Post Office.
- Residential and caravan parks if they’re occupied by retirees.
- Non-Profit organisation-owned property, including property owned by charities, educational or religious institutions, clubs, and associations.
- Care centres including retirement villages, childcare centres, or nursing homes.
The principal place of residence can further potentiate certain concessions in the following circumstances:
- Moving between homes – while owning the two properties in the same year before 31 December.
- Building or renovating – can lead to 4 years of concession once you obtain the title of the owner of the house.
- Living on a property you don’t own – you can get up to 6 years of exemption if you have lived continuously in your house for six months.
- Deceased estate – exemption can be applied during the ongoing ownership transfer process.
- Owning the home through a company or trust.
- Renting part of your property.
Additionally, every land in NSW is free from paying land tax if its taxable value is below the threshold. The deadline for applying for land tax exemption is 31 March.
How Much Is Land Tax in NSW
While there is no general sum required for land taxation in New South Wales, calculating your obligatory contribution is quite simple. Let’s take a look at how you can do that and cover some important aspects of land tax, including tax thresholds and the process of registering for tax.
How To Calculate Land Tax in NSW?
You can calculate your personal land tax with the NSW land tax calculator by simply selecting the tax year and entering your combined taxable land value. Additional information like the combined land value of residential land for surcharge purposes is required for foreigners.
Australians do not have to pay land taxes on every individual property. Instead, land tax is calculated on the combined value of all the taxable land owned on 31 December. The calculations are valid for the land tax that ensues the following year.
For example, if you have a combined taxable property value of $900,000 on 31 December 2021, you will pay land tax for that property in 2022. Every property ownership change which occurs in 2022 will affect your 2023 land tax.
Further reading: What is a tax offset?
Land Tax Thresholds in NSW
Land tax thresholds in NSW have been continuously rising in the last twelve years. Every September, the Valuer General reviews and determines the general and the premium threshold. What determines the amount that will be modified are the changes in average land values in NSW.
The land tax is calculated at a standard rate plus the percentage of property value above the threshold.
- Land tax for properties above the general threshold is equivalent to $100 + 1.6%.
- Land tax for properties above the premium threshold is equivalent to $67,364 + 2%.
So, what is the land tax threshold in NSW?
*Worth noting: The land tax threshold in NSW for 2022 is two times higher compared to 2012.
What You Might Pay in NSW
Let’s take a look at an illustrative table showing potential property tax rates for different property types, based on whether they are liable to land tax.
Note: Although there have been Covid-19 measures to assist taxpayers during the pandemic, unfortunately, there is no land tax relief for 2022.
How to Register for Land Tax
If you have taxable land valued over the land tax threshold, you are obligated to register for land tax in NSW. If you are registering for the first time, you’ll have to fill out the Land Tax Pre-registration Form and get a Client and Correspondence ID.
The process of receiving your registration IDs takes up to two business days, while the registration details can be found on the notice of assessment, which you will be delivered.
Note: Registering a company or a trust can be done by calling 1300 139 816.
Source NSW Government, Report on NSW land values at 1 July 2021
Fun fact: The average house demolition in New South Wales costs $11,500.
Now that we’ve covered the process of property valuation, let’s take a look at the different types of owners that might need to pay land taxes. They include
- sole and joint owners,
- companies (both sole and group-related companies),
- company title units owners,
- trustees and beneficiaries of a trust (except a special trust),
- trustees of a superannuation fund,
- unit trust holders,
- society or organisation (if there are no exempted),
- lessees of a crown or local council land.
If you are still unsure of whether you qualify for land taxation in New South Wales, you can check your assessment notice and verify this information from your personal records.
Assessment Notice
Another way to check if you are liable for land tax is through your annual assessment notice, which includes records of all the land you possess and the amount of land tax you must pay. However, when you receive your assessment notice, you must check the accuracy of the information.
Ensure every land you own is included, the exemption lands are highlighted, and your foreign person status is correct. If there is an error in your assessment notice, log into your Revenue NSW account and make the necessary changes before the first instalment’s due date.
Finally, if there is an issue with the legislation, you must file an objection within 60 days of receiving your assessment notice.
It should be further noted that being a sole and joint owner of different properties means that you will get two assessment notices: individual and joint assessment notices. Furthermore, land tax for joint ownership in NSW entails that you will get a deduction for your assessment because the land you have will be listed in both notices.
How To Pay Land Tax
Paying your land tax can either be done in three instalments in three consecutive months or in full on the first instalment date provided in the land tax assessment notice, which will grant you a 1.5% discount.
Making an extended payment plan and paying your land tax with monthly or fortnightly interest-free payments in six months is also possible if you don’t have overdue land tax amounts.
In NSW, land tax payment methods include
- Online payments,
- Direct debit,
- Credit card (you must call on the phone),
- BPAY,
- Directly at a Service NSW Centre or Australia Post Office,
- Domestic and overseas electronic funds transfer (EFT).
Ensure you are paying your instalments on time because every late land tax payment is charged at a premium rate of interest on the amount you owe.
Did you know that the average size of a house in NSW is 126.0m²?
Clearance Certificates
Clearance certificates are documents showing a property’s current land tax liability status. They are issued when you are buying or selling a house. The seller must provide the buyer with a clearance certificate for the property at least 14 days before the real estate transaction is final.
Additionally, the buyer has the right to apply for a clearance certificate for the property he is potentially purchasing. The application for the certificate must be made through Hazlett Information Services, InfoTrack or Dye & Durham.
Lastly, the clearance certificate can be issued if you plan to refinance and apply for a mortgage.
Bottom Line
Once you have ensured that you are obligated to pay land taxes on your property, you should get acquainted with technicalities regarding your responsibilities, as well as the potential concessions that you may obtain. If we have property above the threshold, make sure you follow the deadlines for land tax registration, applying for exemptions and paying your instalments to avoid any unnecessary costs.
1.Does everyone pay land tax in NSW?
No, only the owners with a combined property with a taxable value over the land tax threshold in NSW are obligated to pay land tax.
2.Do you pay land tax on investment properties in NSW?
Yes, there is a land tax on investment property in NSW for every land valued above the land tax threshold.
3.What is the current land tax rate in NSW?
So, how much is a land tax in NSW? It depends on the type of threshold the property falls under. The general rate is $100 plus 1.6%, and the premium rate is $67,364 plus 2% of the land value above the threshold for 2022.