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Land tax exemption for principal place of residence
Learn about the eligibility criteria for a principal place of residence exemption for land tax in NSW, what you need to provide and how to apply.
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Changes to the eligibility criteria for the principal place of residence exemption
From the 2025 land tax year, a principal place of residence (PPR) exemption will only be available to owner/s who own at least 25% of the property, either solely or jointly and meet the PPR eligibility requirements. Read more about the changes.
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What is a principal place of residence?
The term ‘principal place of residence’ (PPR) refers to a person’s one place of residence they primarily reside in, within or outside Australia. Only one property worldwide may be an owner's PPR.
A PPR may be a parcel of residential land or a strata lot.
The term ‘residential land’ does not refer to the zoning of the land. The term refers to the site of a building or buildings, designed, constructed or adapted for residential purposes.
A caravan situated on land does not constitute a ‘building’ for the purposes of the PPR exemption as it is mobile and not affixed to the land.
An owner must use and occupy the land as a place of residence and for no other purpose to qualify for the exemption, except as permitted in the concessions defined below.
The eligibility criteria below describe situations where a concession for a PPR may apply where the land is not physically used or occupied.
Eligibility for a principal place of residence exemption
The most common type of PPR exemption is when a landowner actively uses and occupies their property as their main residence.
The requirements of this exemption are that you must:
Only claim 1 exemption per family.
Only claim 1 PPR worldwide.
The person/s occupying the property must own at least 25% interest collectively.
Have continuously used and occupied the property solely for residential purposes since 1 July before the relevant taxing date (31 December). If the land was purchased after 1 July, or if the owner started or resumed living there after 1 July, a PPR exemption will be allowed if the Chief Commissioner of State Revenue is satisfied that the land is being used and occupied as the PPR of the owner on the relevant taxing date.
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 one 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 one 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 four 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:
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,
the delay is due to exceptional circumstances beyond the control of the owner, and
the delay could not reasonably have been 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.
To qualify, you must:
Have lived there continuously for at least 6 months before moving away.
Not own another PPR.
Only earn income from the property to cover basic property expenses, such as rates, water and other amenities
Not lease out your property for longer than six 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
The property was suitable for use as a PPR (i.e. habitable by humans) for a continuous period of more than 4 years before the relevant taxing date (31 December).
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 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.
When someone dies, their home will be exempt from land tax, either:
until ownership is transferred to someone else, apart from their personal representative or a beneficiary of the estate, or
for two 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
is not a tenant but occupied the property when the owner died and has been given permission to continue living in the home by the representative of the person who died.
the trust is a fixed trust where the trustee and beneficiaries are natural persons.
Changes to the PPR exemption
This video covers the 2024 amendment to Schedule 1A of the Land Tax Management Act 1956 - Minimum ownership requirement for the ppr land tax exemption.
Revenue NSW will review your application and send you a letter with the outcome when a decision has been made.
You will be advised if further documentation is required to consider your application.
If you have been issued with a notice of assessment prior to lodging your return, you must still pay by the due date as interest and penalty tax may be imposed on any overdue amounts.
If your exemption application is approved, you will be reassessed, and any payments made will be allocated to your new assessment or a refund will be issued if it results in a credit. Read more about how to request a refund.
Revenue NSW works with other government agencies to identify compliance issues with current land tax exemptions. We investigate issues from the last 5 years.
If we decide to review your entitlement to an exemption we will send you a notice of investigation.
If you receive a notice of investigation you must respond by providing additional documents we request.
Under the Taxation Administration Act 1996 we may impose penalties for providing misleading and/or false information, or for deliberately avoiding our requests for information.
The information collected on the application form is necessary to see if you are entitled to an exemption.
The information may be provided to third parties with your consent, or as required, or permitted by law. We will correct or update your personal information at your request.
