Exemptions and concessions

Depending on the ownership and use of the land, you may be eligible for a land tax exemption.

The following exemptions and concessions apply for land tax:

Note: Evidence may be required to support any claim for an exemption or concession.

Principal place of residence

You can claim the principal place of residence exemption for land, including a strata lot, that is used and occupied as your principal place of residence (your home). The exemption is not affected by the value or size of the land.

Each family, including dependents under 18 years, can only claim the principal place of residence exemption for one property.

If there is more than one owner for the land, at least one owner must use and occupy the property as their principal place of residence.

To be eligible for this exemption you must:

  • have continuously used and occupied the land since 1 July of the year prior to the current land tax year (e.g. for 2018, you must have occupied the land since 1 July 2017)

    Note: If the property is not occupied until after 1 July, the Chief Commissioner may grant an exemption if satisfied that the property was used and occupied as your principal place of residence on the taxing date.

  • have used the land for residential purposes

    Note: if you have used the land for incidental business purposes, e.g. if 1 room is used as a home office or workshop and the business is primarily conducted somewhere else, you can still claim the exemption.

  • not use any other land that you own as your principal place of residence on the taxing date, 31 December, other than in the circumstances described in the information section on selling your former principal place of residence

  • be a natural person, a beneficiary of a concessional trust, a life tenant, or a person with a right to reside under the terms of a will.

Land is not exempt if:

  • the land is owned by a company or owned jointly with a company, unless the company is a ‘trustee company’ under the Trustee Company Act 1964 or the Public Trustee, or a company acting in its capacity as trustee of a concessional trust

  • the owner(s) of the land who use and occupy the land as a principal place of residence are an owner only by reason of being a trustee

  • the land is owned by a trustee of a special trust

  • a member of a family, including dependents under 18, who owns the land has received an exemption for another property as their principal place of residence.

    Note: if two or more members of a family continuously use and occupy different properties as their principal residences, the family may choose one of the properties to be the exempt property.

Read more about the principal place of residence exemption:

Land intended as your principal place of residence

If you have purchased property which you intend to use as your principal place of residence (your home), you may be able to claim a concession. To qualify for the concession you must not own another property worldwide which you were using as your home at the taxing date.

If you purchase vacant land or if you purchase a home with the intention of demolishing and rebuilding or renovating, the concession applies for four years immediately following the year in which you acquire the property.

If you have owned a home that has been occupied for residential purposes by another person who was not an owner, but which you intend to occupy after rebuilding or renovating, the concession will apply for the four tax years starting from the time the building or renovations physically commence.

There is no discretion to extend the concession.

To be eligible for this concession:

  • you, your spouse/de facto partner and any dependents aged under 18 who will also occupy the property must not own and occupy another principal place of residence worldwide

    Note: if the property is owned jointly, only one person who intends to use the property as their home needs to qualify.

  • on completion of building or renovation works you must physically occupy the property for a continuous period of at least six months. If you do not meet this residency requirement, the concession for all years will be revoked

  • no income must be gained from the use and occupation of the property since the commencement of building

  • the proposed use and occupation of the property as your residence is lawful

  • it must not be possible, under local planning laws, to build more than two residences or residential units on the property or by combining it with adjoining land you own.

Concession for change to principal place of residence

If you acquire a new residence but you still own your former residence on 31 December, you may be able to claim a concession for both residences.

To be eligible for this concession:

  • you became the owner of the new residence during the 6 months before the relevant taxing date

  • the former residence has not been used or occupied except as your principal place of residence and no income has been gained from the use or occupation of the residence since the preceding 1 July, except:

    • income derived from a permitted occupancy, or
    • income derived from a lease or license entered into by the purchaser under a contract for sale of the former residence for a period prior to completion of the sale.
  • once you became the owner of the new residence it has not been used or occupied except:

    • as your principal place of residence
    • by a tenant under a lease entered into by the previous owner.

You must also use and occupy the new residence as your principal place of residence by the 31 December immediately following the relevant taxing date, or this concession will be revoked.

Residence used for incidental business purposes

If you have a home office or workshop, you may still claim an exemption for your principal place of residence provided the Chief Commissioner is satisfied that the business is primarily conducted somewhere else other than at your residence.

If you use your home for business purposes and you are not eligible for this concession, you may be eligible for a partial exemption under the concession for land partly used for commercial purposes.

Absence from your former residence

If you move out of your principal place of residence (your home), and move into another residence that you do not own (e.g. if you are posted to another part of NSW, interstate or overseas), you may be able to continue to claim an exemption from land tax.

This concession will be allowed for a maximum period of six years. The concession is only available for a maximum of four years where the land ceases to be capable of being used as a residence (e.g. where an owner knocks down the existing home to rebuild).

To be eligible for this concession:

  • you have used and occupied the property as your principal place of residence for a continuous period of at least six months prior to the concession period

  • you do not own and occupy another principal place of residence worldwide

  • the total period in which you receive income from leasing or licensing the property does not exceed six months in a calendar year. If you lease the property for more than six months in a calendar year, you will have to pay land tax for the next tax year unless you resume occupation by the taxing date

  • income is derived from people who occupy the property during your absence, provided the total income is no more than is reasonably required to cover rates, water and electricity charges and similar outgoings (but not mortgage repayments).

If you fail to resume occupation of the home as your principal place of residence following the six year absence the land will become liable for the next tax year.

Deceased estates

Deceased’s principal place of residence

If a property was the deceased’s principal place of residence it will be exempt from land tax:

  • for two years after the date of death, or

  • until the land is transferred to any person (other than the deceased person’s personal representative or a beneficiary of the deceased person’s estate), whichever occurs first.

Tenancy following the death of the owner

If the deceased’s principal place of residence is still used and occupied as the principal place of residence by:

  • a person living in the residence who was given a right to occupy by the will of the owner, or

  • a person (other than a tenant) who lived with the owner immediately before their death and who continues to live in the residence with the permission of the deceased person’s personal representative (usually the executor of the estate),

that person is considered to be the owner of the land, and land tax is not payable – but only while the person continues to use and occupy the land.

Permitted occupancies

If you have let out part of your principal place of residence to another person(s) and receive income from this, you may still be able to claim a concession.

To qualify for this concession, you can let part of your property, but the area occupied by the tenants and boarders must be limited to no more than one of the following:

  • one room
  • one suite of rooms
  • one flat
  • one suite of rooms and one room
  • one flat and one room
  • two rooms, each of which is separately occupied.

If you let parts of your property in addition to these listed above, you may be eligible for a partial concession for that part of the property used as your principal place of residence. For further information read the concession for land partly used for commercial purposes.

Principal place of residence concessions for mixed-use properties

Land partly used for commercial purposes (where the commercial use includes use of buildings for residential and business purposes)

If you use your land as your principal place of residence and to conduct business activities, you may be eligible for a reduction in land tax for the proportion of the land used as your principal place of residence. Land tax will only be payable on the proportion used for business.

Note: if you use one room of your home for business purposes, you may not be liable for land tax provided the business is primarily conducted elsewhere. See the information on land used for incidental business purposes for more details.

You can claim the reduction if part of your home meets the principal place of residence eligibility requirements.

Calculating the reduction

The proportion of the land used as your principal place of residence is exempt from land tax. This proportion is calculated in the following way:

  • if a mixed development apportionment factor is entered on the Register of Land Values maintained by the Valuer General in respect of that land value, this will be used to calculate the reduced taxable land value

  • if there is no apportionment factor then the proportion you specify in your application for a reduction as a ‘fair and reasonable’ proportion of land value will be used

  • if the Chief Commissioner is not satisfied with the proportion you specified as ‘fair and reasonable’, the Chief Commissioner can also request the Valuer General to determine the apportionment factor which will then be used to calculate the reduced taxable land value

  • the Valuer General will determine the apportionment factor based on the rental value of the buildings or parts of the buildings used as your principal place of residence compared to the rental value of the whole of the land.

Land partly used for commercial purposes (where commercial use does not include buildings)

If you use your land as your principal place of residence and for non-residential purposes (e.g. as a retail plant nursery business, a horse stud or tennis court hire), you may be eligible for a reduction in land tax for the proportion used as your residence.

You can claim the reduction if part of your home meets the principal place of residence eligibility requirements.

Calculating the reduction

The proportion of the land used as your principal place of residence is exempt from land tax. This proportion is calculated in the following way:

  • if a mixed use apportionment factor is entered on the Register of Land Values maintained by the Valuer General in respect of that land value, this will be used to calculate the reduced taxable land value

  • if there is no apportionment factor then the proportion you specify in your application for a reduction as a ‘fair and reasonable’ proportion of land value will be used

  • if the Chief Commissioner is not satisfied with the proportion you specified as ‘fair and reasonable’, the Chief Commissioner can also request the Valuer General to determine the apportionment factor which will then be used to calculate the reduced taxable land value

  • the Valuer General will determine the apportionment factor based on the rental value of the buildings used as your principal residence compared to the rental value of the whole of the land.

Primary production land

Land used for primary production

You can claim this exemption for land if the dominant use of the land is for primary production purposes. This exemption applies even if you do not use or occupy the land but someone else uses it for primary production purposes.

To qualify for the exemption the land must be used for primary production for the purpose of selling the produce of the primary production.

If the land is zoned rural, rural residential or non-urban, you can claim the exemption if the dominant use of the land is for primary production, which includes:

  • maintaining animals for the purpose of selling them, their natural increase or their bodily produce
  • cultivating crops for the purpose of selling the produce
  • keeping bees for the purpose of selling the honey
  • growing flowers, orchids or mushrooms for the purpose of sale
  • commercial fishing and commercial farming of fish and oysters
  • commercial plant nursery, but not including a nursery where the principal cultivation is maintaining plants pending their sale to the public.

If the land is not zoned rural, rural residential or non-urban, the land may be exempt if the dominant use of the land is for primary production and the use of the land:

  • has a significant commercial purpose or character based on primary production activities
  • the size or scale of the activities is large enough to be considered a business, not just a hobby
  • is engaged for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made).

To apply for the exemption, submit an Application for Exemption - Primary Production Land (OLT 028).

Read more about the primary production land exemption:

Boarding houses

This exemption is applied to land used and occupied primarily for boarding houses that meet the guidelines approved by the Treasurer, including tariffs.

An annual application is required. To apply for the exemption, submit an Application for Exemption - Boarding Houses Tax.

For more information, see Revenue ruling LT 100 - Exemption - Land Used and Occupied Primarily for a Boarding House - 2017 Tax Year.

Low cost accommodation

This exemption is applied where the land is used for low cost accommodation within a five kilometre radius of the Sydney GPO.

An annual application is required. To apply for the exemption, submit an Application for Exemption - Land Used for Low Cost Accommodation Tax.

For more information, see Revenue Ruling LT 101 - Exemption - Land Used and Occupied Primarily for Low Cost Accommodation - 2017 Tax Year.

Residential parks, including caravan parks

If you own a residential park, including caravan parks, which is primarily used and occupied by retired persons you may be entitled to a full or partial exemption.

To apply for the exemptions, submit an Application for Exemption - Residential Parks.

For more information, see Revenue Ruling LT 071v2 - Exemption - Residential Parks Primarily Used and Occupied by Retired Persons.

Non-profit organisations

Non-profit organisations, including charitable or educational institutions, unions and associations that are not-for-profit and trustees of non-profit organisations, which own land in New South Wales, may be entitled to an exemption from land tax.

For more information, see Revenue ruling LT 009 – Land Owned by Charitable or Educational Institutions and Religious Societies – Liability to Land Tax.

Retirement villages, aged care establishments and nursing homes

Land used and occupied as any of the following and no other purpose is exempt from land tax:

  • an aged care establishment, including a nursing home
  • a retirement village.

For more information, see Revenue ruling LT 031 - Exemption for Retirement Villages and Nursing Homes.

Child care centres

Land used solely for the education or care of children may be entitled to an exemption from land tax. The exemption does not apply for vacant land or during the construction of facilities intended for use as a child care service.

To be eligible, approval must be granted under the Children (Education and Care Services) National Law (NSW) No 104a. Education and care services to which this Law applies include long day care services, family day care services, outside school hours services and preschool programs including those delivered in schools, unless expressly excluded. The land must be solely used as a child care centre and for no other purpose.

Application for this exemption must be made in writing with a copy of the service approval letter.

Last updated: 10 December 2017