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Notice of investigations is sent to property tax customers after an investigation has been conducted on the land ownership. This ensures customers understand their obligations, comply with legislation, and have an opportunity to advise of a change in circumstances.
Land tax is an annual tax levied at the end of the calendar year on the total value of all your taxable land that is above the land tax threshold. Your principal place of residence is exempt, and other exemptions and concessions may apply. Learn more about land tax.
Property tax
Property Tax is a tax which eligible first home buyers chose to pay instead of an upfront transfer duty (previously known as stamp duty). They will pay an annual property tax for the duration of their ownership of the property.
The property tax rates will be indexed each year, so that the average property tax payment rises in line with average incomes.
Home buyers who chose to opt into property tax had until the completion of their purchase (settlement) to change their mind and seek a re-assessment to pay the transfer duty. Once settlement has occurred, you can no longer change your mind as you are the owner of the property.
You will need to notify Revenue NSW within 28 days of the settlement date so that your situation can be considered. An application to withdraw from property tax must be made in writing with documentary evidence to support the extenuating circumstances preventing you from paying property tax. The application must be submitted by your solicitor or conveyancer via eDuties. If your request is approved, Revenue NSW will re-assess the transfer duty and issue you with a Duties Notice of Assessment that will include a due date for payment.
Not once the property has been transferred to you. If you sell the property, you will no longer need to pay property tax. However, any unpaid property tax, would need to be paid prior to, or as part of the settlement process.
The residence requirements do not apply if, at the time the application:
you opted into property tax,
at least 1 of the first home buyers is a member of the Permanent Forces of the Australian Defence Force, and
each first home buyer is enrolled to vote in the NSW state elections.
If you choose to use your property as an investment, you will be assessed at the not owner occupied rate. Refer to How is property tax calculated for further information.
The land on which the proposed secondary dwelling is constructed must only comprise of a single lot or parcel.
The proposed secondary dwelling must also meet the criteria as set out in the legislation to be considered as an approved excluded residence under the Act in order for 100% of the land to be considered owner-occupied.
Revenue NSW conducts regular audits, comparing customer information to data from other government agencies and businesses (for example Rental Bond Board).
It is recommended that the home owner notifies Revenue NSW via our online enquiry form within 3 months of the tenant taking occupancy of the approved excluded occupancy (documentary evidence may be required), in order to avoid the income being derived from the flat being flagged as a potential compliance case and the first home buyer’s liability for property tax being calculated at the incorrect rate.
If the land on which the secondary dwelling comprises of a single lot or parcel and the secondary dwelling meets the criteria set out in the legislation to be considered as an excluded residence, 100% of the land would be considered owner-occupied if all other eligibility criteria are met (e.g. the land is utilised by the included owner as their principal place of residence and is not used for incidental business purposes).
Revenue NSW conducts regular audits, comparing customer information to data from other government agencies and businesses (for example Rental Bond Board).
It is recommended that the home owner notifies Revenue NSW via our online enquiry form that an income is being derived from an approved excluded occupancy (documentary evidence may be required), prior to the issuing of their first notice of assessment.
This will avoid the property being flagged as a potential compliance case and the first home buyer’s liability for property tax being calculated at the incorrect rate.
For this particular scenario, it is also important to note the importance of meeting the residence requirement in order for the property to remain opted into property tax.
Property tax is calculated based on the total unimproved land value of the property purchased. If the property was to be subdivided, the subsequent new lots would remain subject to property tax until transfer of new ownership occurs. If any of the lots, post registration of the subdivision, were sold on, the remaining lot/s would be subject to a property tax reassessment using the amended land details to calculate the property tax liability. Please note, land details include Land Title ID, land value and land usage.
Until such time the land is sold and transferred to a new owner, property tax will remain applicable and payable on both lots.
When your parents transfer their 20% interest in the home to you, you will not pay transfer duty. You will have 3 months to notify Revenue NSW of a change in your ownership share of your home. Your current property tax assessment will be reassessed to show your home is now 100% liable to property tax for the remainder of the financial year. A new notice of assessment will be sent to you.
Yes, you can. You will have 3 months, from the change in use, to inform Revenue NSW that you are no longer using your home as the principal place of residence. The rate charged for owner occupied and not owner-occupied are different and if this change occurs during the financial year, a re-assessment will be issued based on the change in usage.
If a property tax property is sold, the property tax liability is proportionately reduced (in relation to the number of days remaining in the financial year) and the included owner is refunded where appropriate. However, any unpaid property tax, would need to be paid prior to, or as part of the settlement process.
Once the Valuer General informs Revenue NSW of the change in land value your property tax will be re-assessed, and a new notice of assessment will be issued.
Only first home buyers are eligible to choose the property tax, and they must live in the home they have purchased for a minimum of six months within the first 12 months of owning the property (see residence requirement). However, some of these first home buyers may move out of these homes and rent them out to tenants, while still being required to pay the property tax.
Section 40 of the Residential Tenancies Act, 2010, requires residential landlords to pay State taxes. Tenants cannot be asked to pay the property tax.
