The state government collects about $2 billion in Land tax a year. Non-residential properties account for about 60% of Land tax revenue. So what is Land tax?
The Office of State Revenue (OSR) states that Land tax is a tax levied on the owners of land in New South Wales (NSW) as at midnight on the 31 December of each year. If the total value of your taxable land is greater than the Land tax threshold, you will need to register for Land tax. If you own several land items, the value of all your liable land is added together. You will then be charged Land tax on the combined land value above the Land tax threshold.
For the 2014 year Land tax is calculated on any value over $412,000 at $100 plus 1.6% up to the premium threshold. The premium threshold is $2,519,000 and Land tax is then calculated at $33,812 for the first $2,519,000 then 2% over that.
Land tax is paid on land you own, or jointly own, in NSW that is not your principal place of residence (or other exemption or concession) as at midnight on 31 December and the total taxable value of your land is greater than the land tax threshold.
Land tax applies to land regardless of whether income is earned from the land.
Land tax applies to the following:
• vacant land, including vacant 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
The following exemptions and concessions apply for Land tax:
• principal place of residence
• primary production land
• boarding houses
• low cost accommodation
• residential parks, including caravan parks
• non-profit organisations
• retirement villages, aged care establishments and nursing homes
The OSR use land values supplied by the Valuer General, who values your land as at the 1 July. They use the valuation for the year before the tax year, for example, the 2012 value is used for the 2013 tax year. To determine the value of your land, they add the land value for the current tax year and the land values for the previous two tax years, and then calculate the average. Anyone can object to the valuation which is provided by the NSW Valuer-General, however there is only a 60-day window in which this can be done.
Like anything in investments, you will need to analyse your own circumstances however there are a few ways that you can reduce Land tax:
1. Buy units instead of land
2. Buy land using different structures
3. Buy land in several states
If you own land together with a company a single assessment will be issued to you and the company as joint owners. If you own land outside NSW than you are not liable for Land tax on that land. However all other states and territories except the Northern Territory impose Land tax of their own.
For a land tax calculator see:
https://www.apps08.osr.nsw.gov.au/erevenue/calculators/landtax.php
For more information see:
http://www.osr.nsw.gov.au/taxes/land
DISCLAIMER: All information provided in this article is of a general nature only and is not personal financial, taxation or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this article (including Award Accounting for Business Success Pty Ltd, each of its directors and employees) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information.
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