Property tax

The fixed component for a financial year is calculated by multiplying the fixed component of the previous financial year by the Gross State Product Per Capita Indexation factor for the financial year.

Fixed component amount for a financial year
=
Fixed component amount for the previous financial year
x
Gross State Product per capita indexation factor for the financial year

The land value rate is calculated by multiplying the land value rate for the previous financial year by the Gross State Product Per Capita Indexation factor for the financial year and dividing by the land value indexation factor for the financial year.

Land value rate
=
Land value rate for the previous financial year
x
Gross State Product per capita indexation factor for the financial year
÷
Land value indexation factor for the financial year

Where the ownership and land remain consistent from one financial year to the next, if the included owner:

• has the same land use for the entire current financial year as they had in the previous year, they will receive the full benefit of the 4% cap. (See below Fig 1.1 and 1.2)
• changes their land use for the entire current financial year as compared to the previous year, they will not receive the benefit of the 4% cap. (See below Fig 2.1 and 2.2)
• changes their land use partway through the current financial year, they will receive the benefit of the 4% cap only for the portion of the year where the land use is the same as they had in the previous year. (See below Fig 2.3 and 2.4)
• has both classes of land use in the current and previous financial year, the 4% cap will be applied on each usage. (See below Fig 2.5)

Note: There are some differences in the way the 4% cap applies where the land is mixed use, or has been subdivided or consolidated.

Single use and change of use

Single use

Figure 1.1

Figure 1.2

Change of use

Figure 2.1

Figure 2.2

Figure 2.3

Figure 2.4

Figure 2.5

Land value FY 2022/23: $1,000,000

Land value FY 2023/24: $1,100,000

For the FY 2023/2024, the pro rata total of $10,895.20 is higher (based on inflated land value) than the 4% pro rata total of $10,414.20 (based on a 4% increase on the previous year’s usage, dependant solely on the current year’s usage and independent of inflated land value). Payment will always be the lesser, in this case the capped 4% pro rata total, that is $10,414.20.

1. $400 + ($1,100,000 × 0.003) = $3,700
2. $1500 + ($1,100,000 × 0.011) = $13,600
3. 104% × $3,700 = $3848
4. 104% × $13,600 = $14,144
5. $3,700 × (100÷366)  = $1011.00
6. $13,600 × (266÷366)  = $9884.20
7. 104% × $3400 × (100÷366) = $966.10
   104% × $12,500 × (266÷366) = $9448.10

Land value FY 2023/24: $1,040,500

Here we look at the same scenario as above, however the land value has inflated less, at 4.05% (to $1,040,500) FY 2023/24.

Now the pro rata total of $10,370.60 is lower than the 4% pro rata total amount of $10,414.20. As land inflation has not been sufficient to overcome the 4% pro rata total capping, amount due will again be the lesser, $10,370.60.

You are responsible for informing Revenue NSW within 3 months of when your land use changes using our property tax online enquiry form.

Failure to inform Revenue NSW within 3 months of the change of use may incur a penalty under the Taxation Administration Act 1996.

There may be circumstances where an owner is absent from their owner-occupied land due to unavoidable circumstances, or for a temporary period after which the first home buyer intends to return. In certain instances, the owner may not return such as moving into a nursing home.

A special treatment can be provided in certain cases to enable the land to continue to be taxed at the owner-occupied rate.

These include:

Person in full time care

If an included owner is in full-time care and immediately prior to their entry into care they owned the land and the land was owner-occupied, the land will continue to be treated as owner-occupied. No income can be derived during this time except for an excluded residence or amounts reasonably necessary to cover land related costs of the land.

For example, Jim lived in his own home for the last 5 years, which has been treated as owner-occupied for property tax purposes. He recently moved into and now resides at an aged care establishment while being provided with residential care. Jim’s son moved into the property as caretaker and pays all the council, energy and water rates as well as the home insurance. As Jim does not derive income from the land, the owner-occupied rate of tax will continue to apply for so long as these circumstances continue.

Absence from principal place of residence

If an included owner is absent from their land but immediately prior to their absence they owned the land, and the land was owner-occupied, the land will continue to be treated as owner-occupied. The absence cannot be longer than 3 years. Within 12 months of the included owner’s return they must resume occupation for a continuous period of 6 months. No income can be derived during this time except for an excluded residence or amounts reasonably necessary to cover land related costs of the land such as a caretaker. In addition, the included owner cannot use and occupy another residence they own during the time they are absent from their land receiving the special treatment.

For example, Jill had been paying property tax at the owner-occupied rate. The following year she moves overseas for work and rents a flat. Provided she does not receive income, except to cover land related costs or an excluded residence, the land will be treated as owner occupied for up to 3 years from when she moved out.

Before residence requirement is satisfied

When an included owner becomes the owner of the land, they must move into the home within 12 months and live in it continuously for 6 months. The owner-occupied rate will be applied from the date of settlement to when the included owner moves in provided no income has been derived during this time.

For example, if John takes ownership of his home on 1 August 2023, John will have until 31 July 2024 to move into the property and must then reside in it as his principal place of residence for a continuous period of at least 6 months.

If John moves into the home in June 2024, he will be taxed at the owner-occupied rate, even during the period of 1 August 2023 and June 2024, provided that he does not derive any income from the land during that period.

By completing the Property Tax Application Form, you declare that the property is intended to be used as your principal place of residence and will be granted special treatment as owner-occupied unless and until you advise that the above criteria are not satisfied.

Unoccupied land to be used as a principal place of residence owner

Land that is continuously unoccupied due to construction or renovations will be treated as owner-occupied. The duration of this special treatment is up to 5 years however, certain conditions must be met.  No income can be derived during this time and neither the included owner or their family can use and occupy another residence they own during the time.

Within the first 2 years of the special treatment being applied, works will need to have physically commenced or significant steps taken to allow physical works to commence. The included owner will need to commence lawful occupation of the land for a continuous period of at least 6 months within 1 year after the building works are completed.

For example, Jack purchased vacant land in the previous year with the intention of building his property. In the current year he lodges a Development Application and building works commences in the second year following settlement of his purchase. Construction of the property is completed by the end of the fourth year and Jack moves in and continues to reside in the property for 6 months. For the period of time between settlement of the purchase to moving into the property, Jack was residing in his parent's home. His land will be treated as owner-occupied from when he first purchased the land as he has met all necessary requirements.

By completing the Property Tax Application Form, you declare that the property is intended to be used as your principal place of residence and will be granted special treatment as owner-occupied unless and until you advise that the above criteria are not satisfied.

Apply for special treatment

If your circumstances conform with the eligibility criteria outlined above and you would like to apply for a special treatment of certain land, please use the property tax online enquiry form.

Those who opted into property tax instead of the upfront transfer duty, will pay an annual property tax for as long as they own the property. If you sell this property, you are responsible to advise Revenue NSW of your pending settlement date. Property tax is a pro rata tax, which means your liability is calculated proportionately to the number of days you own the property.

If you have exchanged contracts on your property, please advise us of the proposed settlement date by completing the property tax online enquiry form.

In the additional details section of the form please provide:

• A request for a pro rata quote
• Your settlement date

If you have sold your property, in addition to the above-mentioned requirements, you are also required under the legislation to provide a property tax status certificate. Please see Selling your property for more information.

It is important to keep your contact details up to date to ensure you receive your property tax notifications to your preferred address.

Did you know you can opt in for electronic delivery for your notice of assessments?

To opt into digital delivery for your property tax notice of assessments, or to update your contact details, please complete the property tax online enquiry form.

Update your contact details

Excluded residence

The following residences if located on the same lot as the lot used and occupied by the owner of the lot for residential purposes:

• 1 room
• 1 suite of rooms
• 1 flat
• 1 suite of rooms and 1 room
• 1 flat and 1 room
• 2 rooms that are separately occupied.

Equity partner/Not-included owner

A purchaser who is not an eligible purchaser and is not a participant in an Approved Shared Equity Scheme.

Note: The equity partner is liable to pay a proportion of the usual transfer duty, under the Duties Act 1997, based on the percentage interest in the property they are acquiring.

Eligible purchaser/Included owner

The owner who has elected to pay property tax.

Full time care

In an aged care establishment, a building or part of a building used by an approved provider under the Aged Care Act 1997 of the Commonwealth for the provisions of respite care of residential care.

Principal place of residence

The one place of residence of a person, whether within or outside Australia, that is the primary residence of that person.

Spouse

The person to whom the applicant is legally married or living with as a couple in a de facto relationship as defined in the Interpretation Act 1987.

Vacant land

Has the same meaning as section 25 of the Duties Act 1997.

For commonly asked questions and scenarios relating to property tax, see our Frequently asked questions about property tax.

If you haven't found answers on this website to questions about property tax, see our contact us page.