Foreign owner surcharge land tax
From the 2023 land tax year, the surcharge land tax payable on residential land owned by foreign persons increases from 2% to 4% of the taxable value of the residential land owned at midnight on 31 December 2022.
Early Payment Discount
From the 2023 land tax year, the discount for early payment of land tax reduces from 1.5% to 0.5%.
The early payment discount is applied if the notice of assessment is paid within 30 days of being issued.
Selling your property in the New Year?
You can request an early issue Notice of Assessment for 2023 if you’re settling a property in the first 2 weeks of January 2023.
Applications can be made from 12 December 2022.
2023 land tax thresholds
The 2023 land tax thresholds were gazetted on 14 October 2022.
The thresholds for land tax year 2023 are:general threshold: $969,000premium threshold: $5,925,000.
What exactly is land tax?
Land tax is an annual tax levied at the end of the calendar year on property you own that is above the land tax threshold. Your principal place of residence is exempt, and other exemptions and concessions may apply.
Who pays land tax?
You may have to pay land tax if you own, or jointly own:
- vacant land, including rural land
- land where a house, residential unit or flat has been built
- a holiday home
- an investment property or properties
- company title units
- residential, commercial or industrial units, including car spaces
- commercial properties, including factories, shops and warehouses
- land leased from state or local government.
Land tax applies regardless of whether income is earned from the land.
Generally, you do not pay land tax on:
- your home, known as your principal place of residence
- your farm, known as primary production land
- any land you own with total taxable value below the land tax threshold.
Read more about land tax exemptions and concessions.
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. Your liability for each year is based on the value of all land you owned on 31 December in the previous year. Any changes to the land you own this year will only affect how much you pay next year.
Thresholds
The thresholds for land values change each year and are applied as follows:
- General threshold: $100 plus 1.6 per cent of land value above the threshold, up to the premium threshold.
- Premium threshold: $67,364 plus 2 per cent of land value above the threshold.
- The threshold is published in the Government Gazette in October each year and is applied to land holdings on 31 December each year.
- Land tax is applied for the full year following the taxing date of 31 December, and no pro-rata calculation applies.
| Tax year | General threshold | Premium threshold |
|---|---|---|
| 2023 | $969,000 | $5,925,000 |
| 2022 | $822,000 | $5,026,000 |
| 2021 | $755,000 | $4,616,000 |
| 2020 | $734,000 | $4,488,000 |
| 2019 | $692,000 | $4,231,000 |
| 2018 | $629,000 | $3,846,000 |
How is land valued for land tax?
Every year, the Valuer General determines the value of all land in NSW at 1 July each year.
Land value is the unimproved value of your land.
The taxable value of each parcel of land is determined on the average value from the current year and the two past years, where applicable.
When a parcel of land has been created less than three years ago – for example, through a subdivision or amalgamation – we only consider the years after it was created.
Example
| Year | Your land value |
|---|---|
| 2019 | $830,000 |
| 2020 | $910,000 |
| 2021 | $930,000 |
| Average value | ($830,000 + $910,000 + $930,000) / 3 = $890,000 |
Your assessment notice
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.
Check your assessment notice, if you haven’t received one then please contact us and we will be only too happy to assist you.
Check that the following details on your assessment notice are correct:
- all land that you owned on 31 December last year is listed
- land that has been granted an exemption has been highlighted
- you’re not falsely claiming an exemption on any land
- your foreign person status.
If your details are incorrect, give us a call and we can assist before the first instalment date or, if it’s a ‘nil’ assessment, within 40 days of the date shown on the assessment notice.
Help getting it right
Common errors for land tax include:
- not advising that a property, for which principal place of residence exemption has been claimed, is leased
- incorrectly claiming a primary production land exemption where land is used as a hobby farm, or otherwise not for profit
- not listing ownership by a trust, or incorrectly listing the type of trust
- not declaring company group structures
- not advising of a change in land use
- not advising all land holdings including part interests in land
- incorrectly declaring foreign person status.
Need some help with your land tax?
The TSP team are ready to assist you with all your land tax needs – give us a call on 49 26 4155 or email us admin@tspaccountants.com.au