NSW Land Tax Thresholds & Entity Structures: What Property Owners Need to Know

If you own property in New South Wales, understanding how land tax thresholds apply to your ownership structure is essential. Whether you're an individual, a trustee, or a company director, your land tax liability can vary significantly based on how your property is held. In this blog, we’ll explore the current land tax rates, exemptions, and how different entities—such as discretionary trusts, fixed unit trusts, and companies—are treated under NSW law. We’ll also touch on the surcharge land tax for foreign persons and what it means for overseas investors.

What is land tax?
Land tax is a state tax that is levied on some landowners each year. Not all landowners pay land tax. Some landowners may be exempt depending on how their land is used. A threshold amount may be applied to the land value which can determine whether a landowner is liable for land tax.

Please note, land tax is different from other government charges levied on landowners, such as:

• Property tax

• Transfer duty

• Surcharge land tax for foreign persons

• Council rates
  
  

Land Tax Rates - 2024 onwards:

1. For General Threshold of land value of more than $1,075,000 but less than $6,571,000, the rate is $100 + 1.6% of the land value above $1,075,000.

2. For Premium Threshold of land value more than $6,571,000, the rate is $88,036 + 2% of the land value above $6,571,000.

How land tax threshold is applied to different ownership structure?

For Individual Owners:

If you own property as an individual or jointly with others, Revenue NSW assesses your liability based on:

• the total value of all taxable land you own individually, and

• your share of any jointly owned properties.

If you have an interest in jointly owned land, your individual tax assessment will include:

• your interest percentage of that land, and

• 100% of any land you own individually (if any).

For Trusts:

A trust is an arrangement where a trustee manages or holds a property for the benefit of one or more individuals or organisations (known as a beneficiary).

Below trusts do not get the land tax threshold:

• Family trusts

• Discretionary trusts

• Unit trusts

• Trusts created by will

Following trusts are eligible for land tax threshold for land tax purpose:

• Fixed Unit trusts

• Bare Trusts

• Superannuation trusts

• Fixed testamentary trust created by will

• Concessional trusts
  

For Companies:

For land tax purposes, a company includes all bodies or associations, corporate or unincorporated. Companies receive the benefit of the land tax threshold

Surcharge land tax: additional tax

If you are a foreign person who owns residential land in NSW, you must pay surcharge land tax in addition to any land tax may already pay. This surcharge applies even if your property is exempt from regular land tax.

Who is a foreign person?

You are generally considered a foreign person, unless you are:

• an Australian citizen, or

• a permanent resident of Australia who has lived in Australia for 200 days or more within a calendar year (the 200 days do not have to be consecutive).

This definition means that a permanent resident of Australia who lives overseas for 165 days or more in a calendar year (166 days or more in a leap year) is considered a foreign person and may be liable for surcharge land tax.

Conclusion:

Land tax in NSW is not one-size-fits-all. Your liability depends on your ownership structure, the value of your land, and whether you qualify for exemptions or thresholds. Trusts and companies face different rules, and foreign persons may be subject to additional surcharges. Understanding these nuances is key to effective property tax planning.

At 7 Bells, we help property owners and investors navigate land tax obligations with confidence. Whether you're restructuring your holdings or planning a new investment, our team can guide you through the complexities of NSW land tax.

Need help structuring your property ownership? Contact us today at info@7bells.com.au

Reference:

1. Revenue NSW – Land Tax Thresholds and Rate: Revenue NSW – Thresholds and Rates

2. Revenue NSW – How Trusts Are Assessed for Land Tax: Revenue NSW – Trusts and Land Tax