Understanding NSW Land Tax for 2023

If you own land or property in NSW, it’s likely you recently received a Valuer General Notice.  On the Central Coast many landowners have seen a significant increase in their land values on these notices. As a property owner in New South Wales, it is essential to understand the intricacies of land tax and what it means for you.

What is Land Tax?

Land tax is a state tax levied on the owners of land in New South Wales as of 31 December each year. The tax is calculated based on the combined taxable value of all the land  (not subject to an exemption) owned by the taxpayer in NSW.

The purpose of this tax is to provide revenue for the state government, which can be used for essential services such as healthcare, education, and infrastructure development.

Who Has to Pay Land Tax?

Any person or entity that owns taxable land in NSW as of 31 December each year is liable to pay land tax (unless an exemption applies). This includes individuals, companies, trusts, and superannuation funds.

What is Taxable Land?

Taxable land in NSW includes all freehold land, leasehold land, and any other interests in land located in the state.

How is Land Tax Calculated?

NSW land tax is calculated on the total value of all your taxable land above the land tax threshold, not on each property. If the combined value of your land does not exceed the threshold, no land tax is payable.

The thresholds for land values change each year. Revenue NSW has recently announced the Land Tax thresholds for 2023 as follows:

  • General threshold: $969,000 (up from $822,00 in 2022)
  • Premium threshold: $5,925,000 (up from $5,025,000 in 2022)

Note: Some entities may not have access to the land tax threshold, for example discretionary trusts.

Land tax is calculated as follows:

  • General threshold: $100 plus 1.6 per cent of land value above the threshold, up to the premium threshold.
  • Premium threshold: $79,396 plus 2 per cent of land value above the threshold.

Land Tax Exemption

There are several exemptions that apply to NSW Land Tax; they include:

Principal Place of Residence Exemption

If the land is your principal place of residence (PPR), you may be eligible for an exemption from NSW Land Tax. To qualify for the PPR exemption, you must:

  • Occupy the land as your PPR as of 31 December;
  • Not rent out any part of the land; and
  • Not use any part of the land for business or income-producing purposes.

Farmland Exemption

If the land is used primarily for primary production, you may be eligible for a farmland exemption. To qualify for the farmland exemption, the land must be used for primary production for at least two years prior to the relevant tax year.

How is the land value determined?

The Valuer General determines the value of all land in NSW on 1 July each year. This value is the unimproved value of the land. The taxable value of your land for land tax purposes is determined by averaging the value from the current year and the two past years, where applicable. For a parcel of land that was created less than three years ago, only the years after it was created are considered.

Land Value Tool

If you have yet to receive a Land Value assessment, you can access the Valuer General’s online land value search tool. This tool allows you to view and print land values and property information from the Register of Land Values starting from 1 July 2001.  You will need your “property number” to complete a search.  This number can be found by completing a property address enquiry.

What if I sell a property during the year?

Land tax is applied to land holdings on 31 December each year. There is no pro-rata calculation or refund for the period between selling the property and the end of the calendar year. However, if the contract notes that land tax is adjustable, you may be able to recover a portion of your land tax liability from the purchaser.

Registration & Assessment Notices

It is your responsibility to register for land tax when the taxable value of your land holdings has exceeded the threshold.  It is also your responsibility to ensure that all land holdings on your annual assessment notice are correct. Revenue NSW will not notify you that you need to register or follow up on payment. Failure to register may result in penalties such as interest charges.

Once registered, you will receive an annual assessment notice listing all NSW land you owned on 31 December of the previous year and the amount of land tax you must pay.

Revenue NSW is trying to make it easier for customers to manage their land tax online with a MyServiceNSW Account. From 6 June 2023, you will be able to complete the following actions from your MyServiceNSW Account:

  • view and manage your land tax online
  • lodge a return, request an exemption or make any changes to property details
  • access current and past notice of assessments
  • pay your land tax and set up an extended payment plan
  • update your notifications preference to digital.

For more information, visit the Revenue NSW website.