NSW Land Tax - main residence exemption

In reading up on NSW Land Tax, when you rent out what was your main residence, there seems to be an exemption for your main residence for up to 6 years, subject to a 182 day/6 month rule, but I don't understand how it works in conjunction with the taxing date of 31 December each year.

Revenue NSW says:
"During the period of absence by the owner, income may be derived from letting the home under a lease or licence, provided that the period of such letting does not exceed a continuous period of six months or for periods not exceeding a total of 182 days in the calendar year preceding each taxing date. Each overnight stay is counted as one day. This concession applies even if the period during which the residence is let includes the taxing date."

Is usage on the 31 December date relevant at all for this exemption?
If you rent it out for 182 days in a calendar year, are you exempt from land tax altogether, or is it apportioned?
How do you actually declare the period of letting - is it during the lease period, or when you receive the land tax assessment which would normally issue as exempt on your main residence?

 

there is no apportionment.

related:
Tax Tip 185: Land Tax Trap when moving into a rental property in NSW Tax Tip 185: Land Tax Trap when moving into a rental property in NSW

 

Thanks, so would the land tax assessment just continue to be issued as exempt (because it's an existing PPOR and they are moving out), presumably Revenue won't know unless there's some data matching with rental bonds or similar?

If the landlord doesn't meet the conditions for the exemption, when would they need to notify Revenue NSW?

 

If you property is rented then this rule will NOT apply. This exception is for a property that is NOT rented. It allows token costs to be recovered. eg In the case of nanna going into a home and her grandson looks after the home and pays nominal "rent" that covers spcific costs and no more. It must be applied for to operate.

 

Hi Paul,
I’m not in NSW, but if it was rented for 180 days (say 6 months) only in the calendar year on normal arm’s length terms. Why would this lease not be eligible?
Thanks

 

I have debated this with the Rvenue NSW before. The legislation seems to imply that as long as a lease is less than 6 months the 6 year rule could apply. But it seems the Commissioners view is that where the property is leased 6 months or more, even under different leases, the 6 year rule can't apply.

 

here is the relevant subsection from the legislation:

(6) This clause applies in respect of the assessment of a person's ownership of land in a tax year only if the Chief Commissioner is satisfied that no income has been derived from the use or occupation of the former residence in the preceding tax year, except as permitted by subclause (7).

(7) Income may be derived from the use or occupation of the former residence in a tax year if--(a) the income is derived from a lease, licence or other arrangement under which a person has a right to occupy the former residence and the period for which any such right of occupation is conferred does not exceed a continuous period of 6 months, or a total period of 182 days, in the tax year, or(b) the income is derived from any arrangement under which a person occupies the former residence, but the income is no more than is reasonably required to cover council, water and energy rates and charges and maintenance costs of the owner in respect of the residence.

 

formating looks better in this screenshot:

 

Yes they do. - The "or a total period of 182 days" acts as a limit. They also rely on the main residence clause which has a mirrored 6 month problem in Clause 2(2) so that if one fails the other is also easily failed.

 

Agree @Terry_w and @Paul@PFI ,
If over 182 days - no go.

I still can’t really see the argument if someone had a one-off lease for 180 days (or less) how this would fail however.

I can see the argument against your point @Terry_w (whether agree or not) that the Commissioner could argue if a 1 year lease is signed with say 2 months left in the land tax year, then the right of occupation for >182 days has taken place in the effected period even if the full period of that right has not been completed.