When it comes to land tax, there are a multitude of NSW land tax exemptions and concessions you can claim. In relation to your Principal Place of Residence (“PPOR”) i.e. your home, there are general requirements for these exemptions to apply. What are they and how can you claim these exemptions? Here’s an examination of NSW Land Tax exemptions and concessions for your PPOR.
NSW Land Tax Exemptions (PPOR) General Requirements for Eligibility
First off, let’s discuss the general requirements for eligibility regarding the PPOR Land Tax exemptions in NSW. To be exempt from land tax for your PPOR, you need to address the criteria below:
- only claim one exemption per family
- have continuously used and occupied the property solely for residential purposes before the taxing date
- have used the land for residential purposes
- be a natural person. The exemption does not apply to land owned partly or wholly by a company or held in a Special Trust.
Importantly, when applying for a PPOR exemption you may need to provide supporting documents such as:
- electricity bill showing usage
- gas bill showing usage
- home and contents insurance policy
You should also note that council land rates and water rates are not acceptable documents as these do not demonstrate you reside in the property.
Concessions & Other Exemptions relating to PPOR
There are a number of NSW Land Tax concessions and other exemptions available relating to your PPOR in addition to exemptions. These include moving between homes, building or renovating before moving in and deceased estates, among others.
Moving between homes
If you bought a new residence and still owned your previous home on 31 December in the last calendar year, you may be eligible for a land tax concession on both properties.
To qualify, you must:
- have taken ownership between 1 July and 31 December in the previous calendar year
- start living in the new home before 31 December the following year
- only use the new property as your PPOR, unless tenants occupied the home under an existing lease when you took possession.
Also, you must have been the only residents of your previous property up to 1 July in the previous calendar year and can’t have earned any income from it, except from:
- a permitted occupancy
- a contract the buyer entered into before settlement as part of the sale – e.g. the property is leased to tenants.
Building or renovating before moving in
From the 2017 tax year, if you plan to build or renovate, you can claim a concession for 4 years after you take ownership. If tenants or others occupy the home when you become the owner, you can only claim the concession once they move out.
- you must live in the property continuously for at least 6 months once construction is complete
- you can’t generate any income from the property once construction or renovations begin
- you and any others can only use the land for legal purposes
- the land mustn’t have the option to build more than two residences or residential units under local planning laws, including when combined with adjoining land
- you or another family member must not own and occupy another PPOR.
Living away from your home
You may be able to claim an exemption if you move out of your main residence and live in a residence you don’t own. You can claim the exemption for up to 6 years, or up to 4 years if you can’t live on the land – e.g. due to renovation.
To qualify, you must:
- have lived there continuously for at least six months before moving away
- not owned another principal place of residence
- only earn income from the property to cover basic property expenses, such as rates, water and other amenities
- not lease out your property for longer than 6 months in a calendar year – If you lease out your property for longer than 6 months, you must pay land tax in the following year, unless you move back into the home before 31 December.
When someone dies, their home will be exempt from land tax, either:
- until ownership is transferred to someone else, apart from their personal representative or a beneficiary of the estate, or
- for 2 years after the date of death.
If someone still lives in the property, it’s exempt from land tax if the occupant:
- is allowed to live there according to the legal will of the person who has died, or
- isn’t a tenant but occupied the property when the owner died and has been given permission to continue living in the home by the personal representative of the person who died.
Renting out a portion of your home
If you let out part of your home and receive income, you can still claim a Land Tax exemption so long as the leased part of your property is:
- one room
- one suite of rooms
- one flat
- one suite of rooms and one room
- one flat and one room, or
- two rooms, occupied by two different tenants.
If you lease more of your home, you may be eligible for a partial exemption.
Using your home for business
If you conduct some business at home, you might need to pay land tax for the proportion of the property used for work.
You don’t have to pay land tax if you primarily conduct your business somewhere else and only one room in your home is sometimes used for work – e.g. a home office or workshop
Some uses of land are exempt from land tax, or eligible to a concessional rate.
Where land is partly used as the PPOR of the owner and partly used for other non-exempt purposes, it is still possible to claim a reduction in land tax for the portion of the property that is used as the PPOR. The taxable land value will be reduced by an allowable proportion.
If you would like help with respect to NSW Land Tax or your Principal Place of Residence, contact our team of experienced tax accountants and lawyers by calling us on 1300 QUINNS or alternatively, +61 2 9223 9166 to arrange a teleconference or appointment.