Land Tax is an annual tax levied on the land value of any property you own as at 31 December each year.
Each state has a different tax rate and threshold on which land tax applies. In NSW landowners are subject to land tax of $100 + 1.6% on the value of the land over the threshold of $822,000.
There are some exemptions from land tax such as:
You don’t pay land tax on your main residence
You don’t pay land tax on land used for primary production
However, there are also circumstances where you may pay a higher amount of land tax, such as:
If the landowner is a non-fixed trust they are not entitled to the land tax threshold and will pay tax from the first $1 of land value
If the landowner is a foreign person or foreign trust they will pay an extra 2% (rising to 4% from 2023) on the taxable value of the land
If the value of the land is more than $5,026,000 then you will pay 2% on the amount above this amount
Revenue NSW will issue the landowner with an assessment and payment options. Generally speaking, land tax can be paid over 3 instalments.
If the value of your taxable land is above the threshold you must register for land tax. If you fail to register then you may be subject to interest and penalties.
You will need to include the value of any indirect interest in land you may hold through a unit trust or partnership.
If you are considering purchasing or selling land be mindful of the 31 December cut-off date – whoever owns the property at 31 December each year will be assessed on the property, regardless of how long during the year they have owned the property.
If you have questions on your current obligations or are considering buying or selling property contact Maxim today to discuss your options.