What is Land Tax and Do You Have to Pay It?

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What is Land Tax?

Land tax is an annual tax levied by the NSW government on owners of land.

It is important to note that land tax is calculated on the value of land. The value of any building on the land is excluded.

Land tax is based on the combined value of all taxable land you own as of December 31 each year, minus any exemptions or concessions you may be eligible for.

Who is Liable?

In NSW, land tax is generally applicable to those who own or jointly own:

  • Investment properties
  • Commercial properties
  • Vacant land
  • Holiday homes

Land tax is payable even if you do not earn income from the land.

Exemptions and Concessions

There are several exemptions and concessions that you may be qualified for, including:

  • Primary place of residence exemption – you do not pay land tax on your home.
  • Rural land used for primary production
  • Land owned by charities
  • Land below the land tax free threshold.

The Tax Thresholds

As of 2023, the general land tax free threshold in NSW is $969,000. If the aggregated value of all the lands you own is below this amount, no land tax would be payable. However, if the total value exceeds this threshold, the tax rate is $100 plus 1.6% up to the premium threshold, and 2% thereafter.

Premium threshold, as of 2023, is $5,925,000. .

Takeaway

To summarise, if you own property other than your main residence in NSW and the total value of all the lands you own exceeds the land tax free threshold, you are likely required to register and pay land tax.

If you are unsure about whether you have to pay land tax or have other questions regarding land tax, please do not hesitate to contact us.

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