Land Tax NSW

Discussion in 'Accounting & Tax' started by aau1, 18th May, 2020.

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  1. aau1

    aau1 New Member

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    Hi All,

    Am new to this and hoping someone can help me with a question I have regarding land tax in NSW.

    I recently purchased a block of vacant land located in Sydney with my brother and mother with a value of around $1 million. We are intending to build on this vacant land within the next 12 months and the property will become our Principal Place of Residence (PPOR). The land is under our three names in unequal shares as tenants in common.

    At present my mum owns a property which is her current PPOR.

    I was wondering if any of us are liable for land tax? Since we are intending to build on the vacant land which will become our PPOR, my understanding is that we are eligible to have an exemption however as my mum owns a house I am not sure if she can claim a tax exemption on the vacant land which she partially owns. Will my brother and myself be eligible to have a land tax exemption also?

    Any information provided would be greatly appreciated.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Look at schedule 1A to the Land Tax Management Act

    There is an exemption for vacant land intending to become the PPOR. There is also an exemption for joint ownership where at least 1 own lives there.

    And seek legal advice
     
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  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Clause 2 and clause 6. Note that each rule contains a 6 month occupancy rule that should be understood by all parties. And clause 6 has a 4 year limit that also is explained well. The intended occupancy rule must be applied for.

    The principal place of residence exemption
     
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  4. aau1

    aau1 New Member

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    Thanks Paul for the info.

    Under clause 6 it says:

    "The concession for an intended principal place of residence cannot apply if the owner, or any member of the owner’s family (as defined in clause 12) is entitled to claim the PPR exemption for another residence."

    So since my mum currently lives in a house in which she owns, will it be regarded that she is claiming PPOR exemption for this residence and hence will not be entitled for exemption of the intended PPOR of vacant land. Is my understanding correct?
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    It seems you will not be entitled to the exemption while unoccupied.
     
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  6. aau1

    aau1 New Member

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    Seems like it based on my understanding however not sure if me or my brother can apply for the exemption since instead as we don't have any properties we receive the exemption for PPOR.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Not if your mum owns part.
     
  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    There is a limited way especially if mum is paying cash and not borrowing. Discuss with duty competent solicitor about use of deed of apparent purchaser provisions. This allows mum to be added to title after occupancy is permitted. Financing issues could impact this however. A ownership interest doesnt always appear on a tile deed ;)