[MoreMore Insights] What Is Land Tax?

What Is Land Tax

Land tax is an annual tax levied by the government on the land owners according to the value of the land they own. Houses and other ancillary buildings on the land are not included in the estimation of land value. However, different from the product value-added tax (GST), the tax rate of land tax is set by the ministries of finance of each state, and the tax is collected by the governments of each state. In NSW, land tax mainly includes two categories, one is "land tax" and the other is "land tax surcharge".

What Land Is Taxed?

Whether owned alone or jointly with others, as long as the value of the following types of land exceeds the threshold, the land tax shall be paid:

Vacant land, including rural land

Land where a house, residential unit or flat has been built

Holiday home

Investment 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.

What Land Is Exempt?

In New South Wales, if it is a principal place of residence, the property does not need to pay land tax. In addition, there are also farms as the main production land, or the total taxable value of the land is lower than the minimum collection point, which do not need to pay land tax. In 2022, the new state's minimum collection point is $822,000. In short, the most common properties that can be exempted from land tax are houses, farms, charities, and all land with a total value lower than the minimum collection point.

How Land Tax Is Calculated?

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

How To Avoid Land Tax As Far As Possible?

Try to choose houses with high land value as owner occupied property, while houses with low land value as investments, and carefully purchase houses with high land value as investment houses. If you are not an Australian citizen, but on a Permanent Residency or other type of visa, try to live in Australia for more than 200 days in a calendar year, or put the property in the name of a family member with Australian citizenship, so as to avoid paying land tax. Land tax & land tax surcharge is deductible if it meets the requirements. Please consult your accountant for details.