Land Tax is a tax levied by the NSW Government on owners of land. Generally your home or “principal place of residence” is exempt from Land Tax.
Whilst “principal place of residence” appears to be a fairly straightforward concept, arguments often arise in relation to the term, particularly when the Office of State Revenue is chasing Land Tax payments.
Essentially Land Tax is not payable on land that is a “principal place of residence” – that is, residential land that is used and occupied by the owner as their principal place of residence and for no other purpose (with limited home business exceptions).
When determining whether a property is a “principal place of residence”, the following factors are taken into consideration:
- the architectural design and physical character of the property (such that a sleeping place or presence of a bed does not necessarily make the property a “residence”)
- matching the owner’s tax returns, utility bills and drivers licence to the address claimed as the principal place of residence
- the legal right to occupy the property (for example, living in a shed whilst a house is constructed)
- whether the residence is habitable
- whether the utility consumption for the property (for example water, electricity and gas) indicates the owner is living in the residence
With the Chief Commissioner of State Revenue always on the lookout for landowners trying to avoid Land Tax, it is important that the property claimed as your “principal place of residence” is actually that – falsely describing your property as a principal place of residence attracts interest and steep penalties.
It is also necessary for landowners with multiple properties to register for Land Tax so as to receive annual assessments. The Land Tax threshold for 2013 is $406,000 – meaning if the combined unimproved land value of all land owned is greater than this threshold, Land Tax will be payable.
If you are considering purchasing land, contact the experienced conveyancing team at Everingham Solomons who can assist you in determining whether you will be liable for Land Tax because Helping You is Our Business.
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