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You may be liable for land tax surcharge in NSW if you are considered a foreign person.
It was previously identified that citizens of New Zealand, Finland, Germany, India, Japan, Norway, South Africa and Switzerland were not subject to surcharge land tax due to international tax treaties.
However, changes to federal legislation means that citizens of these nations may need to pay surcharge land tax on future land tax assessments for residential land they own in NSW.
We will be providing further information relating to the new legislation as it becomes available and encourage you to monitor this page for updates.
On this page
What is foreign owner surcharge?
If you are a foreign person who owns residential land in NSW, you must pay surcharge land tax in addition to any land tax you may already pay. You may be required to pay surcharge even if you do not pay land tax.
you have lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December, and you are a permanent resident of Australia.
You must pay surcharge on the taxable value of all residential land that you own as at 31 December each year. There is no tax-free threshold applicable to surcharge.
The surcharge rate is:
0.75 per cent from the 2017 land tax year, and
two per cent from the 2018 land tax year onwards
four per cent from the 2023 land tax year onwards.
Surcharge is assessed in relation to each parcel of residential land and is proportional to ownership.
There are no joint assessments and secondary deductions do not apply.
Due to scheduled maintenance the online Surcharge assist tool will be unavailable between 3.30pm on Monday, 15 April and 9.00am on Wednesday, 15 May.
Surcharge assist
The Surcharge assist tool is available to help individuals identify if they may be liable for surcharge land tax.
To confirm your foreign status, use our online services. You will need your Client ID and Correspondence ID to login which can be found on your most recent piece of correspondence received from us.
For more information on surcharge relating to individual and non individual owners such as companies, trusts, partnerships, foreign governments etc. please watch the following short video.
Property D (Residential): $500,000 Property E (Commercial): $700,000
Land Tax calculation
$1,200,000 (total land value) - $1,075,000 (2024 general land tax threshold) x 1.6% + $100 (general land tax rate) = $2,100
Surcharge Land Tax calculation
Property E is not included in this calculation as surcharge land tax does not apply to commercial land.
$500,000 (total residential land value) x 4% (2024 surcharge rate) = $20,000
Note: if a building has both residential and commercial purposes, an apportionment factor is used to apportion the land value and calculate surcharge land tax.
Amount payable
Land Tax Payable = $2,100 Surcharge Land Tax Payable = $20,000 Total = $22,100
Residential land
Residential land includes any of the following.
Description
Conditions
Parcel of land
On which there are one or more dwellings, or on which there is a building under construction that, when completed, will constitute one or more dwellings.
Strata lot
If it is lawfully occupied as a separate dwelling, or suitable for lawful occupation as a separate dwelling.
Utility lot
If its use is restricted to the owner or occupier of a strata lot.
Land-use entitlement
If it gives the holder of the land-use entitlement to occupy a building, or part of a building, as a separate dwelling, for example, company title and residential flats.
Parcel of vacant land
Zoned or otherwise designated for use for residential or principally for residential purposes.
Residential land does not include land used for primary production that is exempt from land tax.
The following visa holders will be exempt from surcharge land tax on their principal place of residence if they use or intend to use and occupy their home for a continuous period of 200 days in a land tax year:
permanent visa holders
partner (provisional) visa holders (subclass 309 or 820)
holders of retirement visas (subclass 410 and 405).
Dates to remember:
You must apply for the exemption by 31 March in the relevant tax year.
This principal place of residence exemption only takes effect from the 2018 year.
Exemptions for retirement visas apply from the 2020 land tax year.
Note: For the 2023 and future land tax years, you will need to be physically within Australia for a continuous period of 200 days during the land tax year. However, the Chief Commissioner may waive this requirements as per section 5B(2A) and 2B of the Land Tax Act 1956.
Revenue Ruling G011 clarifies where the surcharge will not apply to residential premises. The ruling identifies the following commercial premises as not being liable for surcharge:
Hotels, motels, and inns
Hostels and boarding houses
Student accommodation
Aged care and other care facilities
Bed and breakfast accommodation
Caravan and home parks
Separately titled rooms, apartments, serviced apartments, cottages and villas.
It is important to refer to Revenue Ruling G011 for information on the features that must be present to meet the requirements.
If the land you own falls into one of these categories, you can apply for an assessment or reassessment by lodging a return via our online services. The supporting documents you may need to provide when you apply are detailed below.
An exemption from the surcharge if it is satisfied that the land will be used for:
construction and sale of new homes, or
subdivision and sale for new home construction
From 19 May 2022, the concession also applies to land that is used wholly or predominantly for commercial or industrial purposes.
A refund from surcharge where the foreign person has not been granted an exemption from surcharge, but the land has been used for the above purposes.
Guidance on the circumstances for granting or revoking an exemption are provided in the Revenue Ruling.
If an exemption is granted and the land tax and/or surcharge has already been paid you can apply for a refund.
An application for refund must be made:
within 12 months of the home being sold or the issue date of the subdivision certificate and
no later than 10 years after the acquisition of the land.
The 10 year period applies to land acquired after 21 June 2016. If the completion of the land occurred before 21 June 2016, then a five year period will apply.
To apply for a refund, exemption or reassessment you must apply online.
Build-to-rent
In 2020, amendments were made to provide an exemption from surcharge for Australian Corporations where an eligible build-to-rent property has been constructed.