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Under the Taxation Administration Act 1996, we may impose penalties for providing misleading and/or false information, or for deliberately avoiding our requests for information. We conduct investigations and compliance checks to ensure that exemptions are only granted to those clients who are entitled to receive them. Under reciprocal power arrangements we are also able to obtain information from the Australian Taxation Office (ATO) for the purposes of land tax administration.
The general requirements of this exemption are that you must: .
only claim one exemption per family
only claim one principal place of residence worldwide
have continuously used and occupied the property solely for residential purposes before the taxing date
have used the land for residential purposes
be a natural person. The exemption does not apply to land owned partly or wholly by a company or held in a Special Trust.
The 2024-25 NSW State Budget introduced an amendment to Schedule 1A of the Land Tax Management Act 1956. From the 2025 tax year, a principal place of residence exemption will only be available to a person/s occupying the property as their principal place of residence who owns an interest of at least 25% in the property, either solely or combined.
The transitional provision provides that, those who claim the principal place of residence exemption from land tax but own less than a 25% interest in the land may continue to claim the exemption for the 2024 and 2025 land tax years. The minimum 25% ownership requirement will then apply to these owners from the 2026 land tax year onwards. If you have not claimed the exemption by 1 February 2024 but were entitled to it, you can still ‘update your land tax details’ via our online services to apply for the exemption and be eligible for the transitional provision.
You can view our educational video for more information on the changes to the principal place of residence ownership requirements.
When applying for the exemption you may need to provide supporting documents such as but not limited to:
electricity bill showing usage
gas bill showing usage
home and contents insurance policy
Council land rates and water rates are not acceptable documents as these do not demonstrate you reside in the property.
Types of principal place of residence exemptions and concessions
If you bought a new residence and still owned your previous home on 31 December in the last calendar year, you may be eligible for a land tax concession on both properties.
To qualify, you must:
have taken ownership between 1 July and 31 December in the previous calendar year
start living in the new home before 31 December the following year
only use the new property as your principal place of residence, unless tenants occupied the home under an existing lease when you took possession.
Also, you must have been the only residents of your previous property up to 1 July in the previous calendar year and can’t have earned any income from it, except from:
a permitted occupancy
a contract the buyer entered into before settlement as part of the sale – e.g. the property is leased to tenants.
From the 2017 tax year, if you plan to build or renovate, you can claim the concession for up to four years after you take ownership. If tenants or others occupy the home when you become the owner, you can only claim the concession once they move out.
To qualify:
you must live in the property continuously for at least six months once construction is complete
you can’t generate any income from the property once construction or renovations begin
you and any others can only use the land for legal purposes
the land mustn’t have the option to build more than two residences or residential units under local planning laws, including when combined with adjoining land
you or another family member must not own and occupy another principal place of residence.
The Revenue Legislation Amendment Act 2023which received assent on 31 May 2023 amended the Act to permit the Chief Commissioner to extend the availability of the concession from four tax years to up to six.
Chief Commissioner may extend the period if satisfied:
there has been a delay in the completion of the building or other works necessary to facilitate the owner’s intended use and occupation of the land as a principal place of residence,
the delay is due to exceptional circumstances beyond the control of the owner, and
the delay could not reasonably have been avoided by the owner.
The amendment commenced from 1 July 2023. However, the Chief Commissioner has the power to apply the extension to an exemption that ended on or after 31 December 2019.
You may be able to claim an exemption if you move out of your main residence and live in a residence you don’t own. You can claim the exemption for up to six years, or up to four years if you can’t live on the land – e.g. due to renovation.
To qualify, you must:
have lived there continuously for at least six months before moving away
not own another principal place of residence
only earn income from the property to cover basic property expenses, such as rates, water and other amenities
not lease out your property for longer than six months in a calendar year - If you lease out your property for longer than six months, you must pay land tax in the following year, unless you move back into the home before 31 December.
is allowed to live there according to the legal will of the person who has died, or
isn’t a tenant but occupied the property when the owner died and has been given permission to continue living in the home by the personal representative of the person who died.
If you own the home you live in through a trust or company, you must pay land tax if:
the land is owned by a company or owned jointly with a company, unless the company is a ‘trustee company’, or a company acting as trustee of a concessional trust.
you only own the land because you’re a trustee
the land is owned by a trustee of a special trust.
If you conduct some business at home, you might need to pay land tax for the proportion of the property used for work.
You don’t have to pay land tax if you primarily conduct your business somewhere else and only one room in your home is sometimes used for work - e.g. a home office or workshop.
Some uses of land are exempt from land tax, or eligible to a concessional rate.
Where land is partly used as the principal place of residence of the owner and partly used for other non-exempt purposes (beyond what is permitted in Schedule 1A Clause 5 - land used for incidental business purposes) it is still possible to claim a reduction in land tax for the portion of the property that is used as the PPR. The taxable land value will be reduced by an allowable proportion.
Your land is exempt from land tax if it’s used for low cost accommodation and is within 5km of the Sydney General Post Office (GPO). Use our interactive map to see if your property meets the criteria.
Land may be eligible for exemption if it’s owned or held in trust by a non-profit organisation, including:
a charity
an educational institution
a religious organisation.
To qualify, your organisation:
must only have a charitable, educational or religious purpose, such as caring for aged or unwell clergy, or ministers and their wives, widows or children
must not carry out business for the profit of its members.
To qualify for this exemption, you must outline your organisation’s regulations, rules and objectives, and prove that income can’t be distributed to members.
You’ll need to provide:
financial statements for the last two years
your latest annual report
your organisation’s constitution, or a copy of the memorandum and articles of association
evidence that there can be no distribution to members if the organisation is wound up.
Crown land is leased land, owned and managed by state government, for which the Crown is liable for land tax.
Council land is owned and operated by the local council.
Land is exempt from land tax if:
the term of the lease is less than 12 months, including any period under an option
the lessee is the Crown, a local or county council, or a public authority
the lease was entered into before 1 January 1987 and the terms of the lease relating to rental payable remain unchanged (for land leased from the Crown only)
the lease was entered into before 1 January 1991 and the terms of the lease relating to rental payable remain unchanged (for land leased from local and county councils, and NSW public authorities only).
The following visa holders are exempt from surcharge land tax on their principal place of residence if they occupy their home for a continuous period of 200 days in the current land tax year:
permanent visa holders
partner (provisional) visa holders (subclass 309 or 820)
holders of retirement visas (subclass 410 and 405)
You must apply for the exemption by 31 March in the relevant tax year.