Land tax is levied on anyone who owns property that is not their principal place of residence. It is calculated on the total value of all taxable land above a particular threshold.
The thresholds for land values change each year. This year in NSW, properties over the general threshold of $822,000 incur a tax amount of $100 plus 1.6% of the land value up to the premium threshold which is $5,026,000.*
Any property valued above the premium threshold incurs a further 2% tax.
How is land tax calculated?
Land tax is calculated on the total value of all your taxable land above the land tax threshold, not on each individual property. If the combined value of your land does not exceed the threshold, no land tax is payable.
If you are liable for land tax, you will receive an annual assessment notice that will include a list of all NSW land you owned on 31 December the previous year and how much land tax you must pay.
It’s a good idea to be aware of the land tax thresholds each year so you are prepared if your property jumps over the threshold.
Similarly, if you are considering purchasing another investment, be aware that this might also take you over the threshold, meaning you are obliged to pay land tax.
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Are there any discounts on land tax?
The NSW Government is introducing a land tax discount for new build-to-rent housing projects until 2040, and eligible properties will receive a 50% reduction in land value for land tax purposes. The guidelines and application process can be found here.
Our Investment Services team can offer independent advice and guidance on the above, ensuring the right conversations are had with your accountant and financial advisor so you can make an informed decision. Get in touch with our Investment Services team today.
Disclaimer: This information is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your situation, and for professional advice, seek out a financial adviser.
*Source: Revenue NSW