If you're 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’re generally considered a foreign person, unless:

• you're an Australian citizen
• you've lived in Australia for more than 200 days in the 12 months before the purchase date, and you're:
  • a permanent resident of Australia, or
  • a New Zealand Citizen, who holds a subclass 444 visa.

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.

Surcharge is assessed in relation to each parcel of residential land and is proportional to ownership.

There are no joint assessments and secondary deductions don't apply.

A principal place of residence exemption may apply to you from the 2018 tax year. It applies for one year and one residential property. Residency requirements must be met.

Residential land

Residential land includes any of the following.

Residential land doesn't include land used for primary production that is exempt from land tax.

Surcharge applies if a building has both residential and commercial purposes. In this case, an apportionment factor is used to apportion the land value.

Commercial residential premises

Surcharge land tax does not apply to commercial land, however some commercial businesses provide a form of housing on residential land.

From 2017, certain residential premises are exempt from surcharge purchaser duty and surcharge land tax.

Revenue Ruling G 011 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 G 011 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 via our online services. The supporting documents you may need to provide when you apply are detailed below.

Surcharge Exemptions and concessions

Surcharge Intended Principal Place of Residence

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
• New Zealand citizens who hold a special category visa (subclass 444)
• 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.

You can apply for this exemption online. Please note, you may need to provide a copy of your visa.

Australian-based developers

In 2017 amendments were made to provide for surcharge concessions to Australian-based developers who are foreign persons.

There are two forms of concession or exemption.

1. An exemption from the surcharge if it is satisfied that the land will be used for:
   1. construction and sale of new homes, or
   2. subdivision and sale for new home construction.
2. 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.