Land Tax is quite often a forgotten and misunderstood tax that can fly under the radar of many property investors. This tax generally applies to those who own, or jointly own, a property in NSW that is not their primary place of residence or that is not exempt.
Land Tax is assessed in December each year, so with the arrival of the 2017 Land Tax Assessment Notices due in January 2017, now is a good time to re-examine the fundamentals of Land Tax and to revisit the important steps you need to take.
Key things you need to know
- Land owners need to self-assess if they are liable for Land Tax and register if required.
- NSW Land Tax is levied on NSW land you hold at midnight on the 31st December each year based on the unimproved land value.
- NSW Land Tax is NOT applicable to all properties you own. Some properties, such as your personal home or primary production land are exempt from land tax.
- NSW Land Tax is payable on land even if it is not earning any income, such as vacant land, hobby farm or a holiday home.
- Land Tax is assessed whether the property is owned by you as an individual, in partnership, by a company or trust controlled by you, or by a superannuation fund.
- Other than for companies within larger groups and certain types of trusts, property owners only have to pay land tax on the value of land over the Land Tax Threshold.
- The NSW Land Tax Threshold for 2017 is $549,000.
- Land Tax in NSW is calculated at $100 + 1.6% of land value in excess of $549,000. For example, property with a land value of $600,000 would attract $916 land tax in 2017. Premium properties attract a higher rate of 2% of their land value over $3.357 million.
- Land Tax is a state tax so you need to be aware of the limits and tax rates in each state in which you hold property.
- You can find out more about NSW Land Tax at http://www.osr.nsw.gov.au/taxes/land.
Time to review your Land Tax situation
If you are already registered, you will receive a Land Tax Assessment Notice in the post. If any of the details on the Assessment Notice are incorrect, including the details of the land assessed, you have until the first instalment date to notify the Office of State Revenue of any changes, usually the end of February.
If you disagree with the land values used as the basis of your assessment, you may submit an objection within 60 days from the date of issue of a land tax assessment.
If you are not already registered, but will be liable for land tax for the first time in 2017, you have until 31 March 2017 to submit your registration.
BLG Business Advisers specialises in assisting property investors in all states of Australia. Please get in touch with us online or by calling (02) 4229 2211 to discuss your property or land tax issues.