Land tax exemption for principal place of residence

If you lease out part of your home and receive income, you can still claim the exemption so long as the leased part of your property is for one of the following excluded residential occupancies:

• 1 room
• 1 suite of rooms
• 1 flat
• 1 suite of rooms and 1 room
• 1 flat and 1 room, or
• 2 rooms, occupied by 2 different tenants.

If you lease more of your home, you may be eligible for a partial exemption.

If you conduct some business at home, you might need to pay land tax for the proportion of the property used for work.

You do not have to pay land tax if you primarily conduct your business somewhere else and only 1 room in your home is used for work, e.g. a home office or workshop.

Some uses of land are exempt from land tax, or eligible for a concessional rate.

Where land is partly used as the PPR of the owner and partly used for other non-exempt purposes (beyond what is permitted in Schedule 1A Clause 5 - land used for incidental business purposes) it is still possible to claim a reduction in land tax for the portion of the property that is used as the PPR.

The taxable land value will be reduced by an allowable proportion.

If you plan to build or renovate, you can claim a concession for up to 4 years after you take ownership. If tenants or others occupy the home when you become the owner, you can only claim the concession once they move out.

To qualify you must meet all 5 of the following conditions:

• You or another family member must not own and occupy another principal place of residence.
• You must live in the property continuously for at least six months once construction is complete.
• You cannot generate any income from the property once construction or renovations begin.
• You and any others can only use the land for legal purposes.
• The land must not have the option to build more than 2 residences or residential units under local planning laws, including when combined with adjoining land.

The Chief Commissioner can extend the availability of the concession from 4 tax years to up to 6 if satisfied:

1. there has been a delay in the completion of the building or other works necessary to facilitate the owner’s intended use and occupation of the land as a principal place of residence
2. the delay is due to exceptional circumstances beyond the control of the owner, and
3. the delay could not reasonably have been avoided by the owner.

Need more detailed information?

Commissioner’s Practice Note 031 - Concession for unoccupied land intended to be owner’s principal place of residence provides guidance on what the Chief Commissioner may classify as exceptional circumstances beyond the owner’s control and what could not be reasonably avoided by the owner.

If you acquire a new residence and still own your previous home on 31 December, you may be eligible for a land tax concession on both properties for one land tax year

To qualify for the concession you must meet all of the following conditions:

• Take ownership of the new home between 1 July and 31 December in one year and start living in it before 31 December the next year.
• Only use the new home as your PPR, unless tenants occupied the home under an existing lease when you took possession.
• You have been the only residents of your previous property between the period 1 July and 31 December prior to the relevant taxing date and not earned any income from it, except from:
  • an excluded residential occupancy, or
  • a contract the buyer entered before settlement as part of the sale, e.g. the property is leased by the buyer for a period before settlement is completed.

You may be able to claim a concession if you move out of your main residence and live in a residence you do not own. You can claim the concession for up to 6 years, or up to 4 years if you cannot live on the land – e.g. due to renovation.

For up to 6 years

To qualify you must:

• have lived there continuously for at least 6 months before moving away
• not own another PPR, and
• only earn income from the property to cover basic property expenses, such as rates, water, and other amenities, or
• not lease out your property for longer than 6 months in a calendar year (if you lease out your property for longer than 6 months, you must pay land tax in the following year, unless you move back into the home before 31 December).

For up to 4 years

If the land ceases to be capable of being used and occupied as a residence, to qualify you must:

• have lived there continuously for at least 6 months before moving away
• not own another PPR, and
• resume use and occupation by the relevant taxing date of the 4th year.

Owner in full time care

The 6-year limit on this concession does not apply to owners who are living away from their home if they are in full time care.

In these cases, the concession can be extended indefinitely provided all other requirements listed above are met.

What constitutes full-time care?

• Residing at a hospital as a patient.
• Residing at an aged care establishment while being provided with residential care.
• Residing at an aged care establishment while being provided with respite care.
• Resides with a carer who is eligible for a carers payment under the Social Security Act 1991 (Commonwealth).

When someone dies, land used and occupied as their PPR will continue to be exempt from land tax, until whichever of the following happens first:

• Ownership is transferred to someone else, apart from their personal representative or a beneficiary of the estate.
• For 2 years after the date of death.

If someone still lives in the property, it is exempt from land tax if the occupant:

• is allowed to live there according to the legal will of the person who has died, or
• resided in the property with the owner until their death and has been given permission to continue living in the home by the representative of the person who died (this person cannot be a tenant).

If the home you live in is owned by a company or in a trust, you must pay land tax unless:

• the company ownership is only as a trustee for a concessional trust, or
• you are the beneficiary of a fixed trust where the trustee and beneficiaries are natural persons, and all the PPR eligibility requirements are met.