Land tax

Land tax

If you own property in New South Wales (NSW), that is not your primary residence, you may have to pay land tax. If you live in your own home, it is generally exempt.

Do I have to pay land tax?

Paying land tax on property you own in NSW depends on what land you own, what it is used for, and its total value as at midnight on 31 December each year.

Land tax applies to land regardless of whether or not income is earned from the land.

If the total value of your taxable land is greater than the land tax threshold, you will need to register for land tax.

Once you register, we will send a notice of assessment which will include a summary of your land holdings and will show you if you have a land tax liability.

A certificate may still show a land tax charge if we have reason to believe you are a foreign person and may be liable for Land Tax Surcharge. If this information is incorrect, you should go online and advise us that you are not foreign.

What land is taxed?

You may have to pay land tax if you own, or jointly own:

  • vacant land, including vacant 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.

What land is exempt?

Land tax does not apply to exempt land. The most common exemptions are for:

  • Your home, known as your principal place of residence
  • Your farm, known as primary production land
  • All land you own if the total taxable value is below the land tax threshold.

Read more about land tax exemptions.

Who is the owner of land?

For land tax, you are an owner if you are:

  • a sole owner
  • joint owners
  • a company
  • owners of company title units
  • a trustee of any trust
  • a beneficiary of a trust which is not a special trust
  • a society or organisation whose land is not exempt
  • unit holders with interest in a unit trust which is entitled to the land tax threshold
  • trustees of superannuation funds
  • certain lessees of crown or local council land.

How is the value of my land determined?

The Valuer General values all land in NSW annually and provides these values to Revenue NSW for land tax purposes. Values are determined as at 1 July, preceding each land tax year, for example the 2017 value is used for the 2018 tax year.

Average values

For 2007 and subsequent tax years, the value used to determine your land tax liability will generally be the average of the land value for the current tax year and the land values for the previous two years.

Where a parcel of land was only recently created (e.g. by subdivision or amalgamation) the average value will be based only on the land values for those taxing dates when the newly created land item existed.

Strata unit valuations

For strata units, the land value for each individual strata lot is calculated on a proportional basis, using the unit entitlement for each lot and the aggregate for the strata scheme.

More information on land values

Landowners can find out more about land valuations at the Valuer General and see an overview of land values in your local government area.

What if I disagree with the valuation of my land?

Revenue NSW does not make or oversea land valuations. If you disagree with the valuation of your land, you may object to the Valuer General within 60 days of receiving your notice of assessment.

For more information, visit the Valuer General website.

Note: if you are objecting to your land valuation, you will still need to pay your land tax or you may be charged interest on any outstanding liability.

How is land tax calculated for 2018?

Land tax is calculated on the total value of all your taxable land above the land tax threshold. For 2018 the threshold is $629,000.

The amount of tax paid is $100 and 1.6 per cent of the land value between the threshold and the premium rate threshold, $3,846,000, and 2 per cent thereafter.

Where land is owned in partnership, regardless of the number of partners, the threshold is still $629,000.

An individual’s interest in a partnership may also be assessed if that owner holds other land individually or with other partnerships.

If the combined value of your land does not exceed the threshold, no land tax is payable.

Companies

A company is assessed in the same way as an individual unless it is related to another company.

Related companies

Companies are related if:

  • a company controls the composition of the board of directors of the other company
  • one or more persons own more than half the voting shares in two or more companies
  • a person(s) and a company, in which they are a shareholder together, have a controlling interest shareholding in another company.

When assessing related companies the concessional company receives the benefit of the threshold and each other company (non-concessional) is assessed without the threshold.

Where the concessional or joint concessional companies’ land value exceeds the premium rate threshold, the land value of each non-concessional company is assessed at 2 per cent of the taxable value.

Where the land value does not exceed the premium rate threshold, but exceeds the general threshold, the land value of each non-concessional company is assessed at 1.6 per cent of the taxable value.

For more information on related companies, see Revenue Ruling LT 003v2 - Related Companies Section 29 of the Land Tax Management Act 1956.

Trusts

For land tax purposes, trusts can be divided into six categories:

  • special trusts
  • fixed trusts
  • superannuation trusts
  • trusts created by a will
  • concessional trusts
  • charitable trusts.

A special trust is a trust where the trustee is the only person who meets the definition of ‘owner’ for land tax purposes, and the beneficiaries are not considered to be owners. If a trust does not meet one of the following trust definitions, it is a special trust. Examples of special trusts include most family trusts, discretionary trusts, some unit trusts and some trusts created by a will.

The land tax threshold does not apply to special trusts, which are taxed at a flat rate of 1.6 per cent for amounts up to the premium land tax threshold and then at 2 per cent thereafter.

The following trusts receive the land tax threshold:

A fixed trust is a trust where the beneficiaries are considered to be owners of the land at the taxing date of midnight 31 December. This is because they are presently entitled to the income and capital of the trust and these entitlements cannot be varied by the trustee in any way. Fixed trusts include some unit trusts and bare trusts.

A superannuation trust is a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust under Sections 42, 43 and 44 respectively of the Commonwealth Superannuation Industry (Supervision) Act 1993.

A trust created by a will is entitled to the threshold. However, if the trust is a testamentary discretionary trust, it will become a special trust 24 months after the date of death of the testator, or such further period as approved by the Chief Commissioner.

A family unit trust is a trust that held land at midnight on 31 December 2005 with a taxable value of $1,000,000 or less, the unit holders have fixed entitlement to income or capital, and 95 per cent or more of the units were family-owned. Certain criteria must be met to continue to qualify as a family unit trust.

A concessional trust is a trust where the land in the trust is held for the benefit of a person who is:

A special disability trust within the meaning of the Commonwealth Social Security Act 1991 is also taken to be a concessional trust.

A charitable trust, includes trusts created for the relief of poverty, advancement of education or religion or for the benefit of the community.

A unit trust may be a fixed trust, a special trust or a family unit trust. To be a fixed trust, certain criteria apply. If these criteria do not apply, the trustee may restructure the trust deed to meet the criteria but the threshold will only apply from the next tax year.

Note: A beneficiary or unit holder in a fixed trust, a trust created by a will (other than a special trust), a family unit trust or a concessional trust is an owner of their interest in the trust and would need to take the value of their interest into account when a liability to land tax is being considered.

Your assessment notice

I’ve received an assessment – what now?

Your notice of assessment should list all NSW land you owned at midnight on 31 December of the previous year. The assessment notice will also include any exempt land you own and your interest in jointly owned land.  

Before you pay your assessment you should check it to confirm all the details are correct. Make sure:

  • All the land you own is listed
  • You have not received an exemption for land that is not eligible
  • Land you no longer own has not been included
  • Land that has been granted an exemption has been highlighted as exempt, including your principal place of residence.
  • Your foreign status is updated

If you have found an error or your details are incorrect, you should go online to update your details. Any variation you make must be submitted before the first instalment date listed on the notice of assessment, or if it is a ‘nil’ assessment, within 40 days of the date shown on the notice of assessment.

If land tax is still payable, you should pay the first instalment as per your assessment. You will be issued with a revised assessment, with any payments credited or any excess refunded.

I have received two or more individual assessments?

You should only receive one individual assessment notice. If you receive more than one individual assessment, you must go online to let us know so we can correct your records. If you jointly own land you will receive a separate joint assessment notice.

How am I assessed for land tax if I am a joint owner?

If you own land with others, you are a joint owner. We assess joint owners for land tax in two stages:

  1. Joint ownership assessment:

    We assess all of the joint owners together, on all of their jointly owned land as though they were an individual. Each unique combination of owners is considered a different joint ownership.

  2. Individual assessment:

    We then assess each member of the joint ownership individually for all of their interests in taxable land. Your individual assessment lists all the land you own. This includes any land you own by yourself, jointly with others, or as a notified or nominated beneficiary of certain trusts.

Am I paying double?

To prevent double taxation on land included in both a joint and individual assessment, a deduction is applied to the individual assessment that relates to the individual’s interest in the jointly owned land.

Calculating the deduction

The allowable deduction is the lesser of the following two amounts:

Interest of individual in joint ownership / total land value of joint ownership x tax on joint ownership

OR

Interest of individual in joint ownership / total land value of individual x tax on individual

This amount is deducted from the total amount of land tax assessed in the individual assessment.

Example using 2018 rates

Bill and Kate jointly own property 1 with a land value of $800,000. Bill owns property 2 individually which has a land value of $300,000.

Bill will receive a joint assessment with Kate for property 1 and an individual assessment on his share in this property plus property 2.

Calculation 1:

$400,000 / $800,000 x $2,836 = $1,418

Note: $800,000 - $629,000 x 1.6% + $100 = $2,836

OR

Calculation 2:

$400,000 / $700,000 x $1,236 = $706.30

Note: $700,000 - $629,000 x 1.6% + $100 = $1,236

Bill’s allowable deduction is $706.30, so his total land tax payable will be:

$1,236 - $706.30 = $529.70

What if I disagree with my land tax assessment?

If the details on your land tax assessment are incorrect (e.g. you are incorrectly listed as a landowner or land is listed that you believe should be exempt) you need to update your details with us. You can do this online or by contacting us.

If you disagree with your assessment, you have the right to lodge an objection to the Chief Commissioner within 60 days of the date of assessment.

To lodge an objection, submit an Application for Objection form.

If you are objecting to more than one assessment, you will need to lodge a separate objection for each assessment.

An independent review will be conducted and a written decision will be sent to you as soon as possible.

If you disagree, you are entitled to request a review of the decision. The review request must be submitted with either the Administrative Decisions Tribunal or the Supreme Court within 60 days of the date you received our written decision.

Note: even if you are making an objection you will still need to pay your land tax or you may be charged interest on any outstanding liability. If your objection is successful, you will receive a refund.
Last updated: 12 December 2017