NSW land tax threshold & PPOR

Discussion in 'Accounting & Tax' started by money, 13th Nov, 2021.

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  1. money

    money Well-Known Member

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    Bart, now 18 years old, decides to buy his first property. Ned Flanders has enough of Homer "borrowing" his tools and never returning them. Ned decides to sell up and get as far away from Homer as possible. Bart sees this as an opportunity and purchases Ned's property. Bart moves in and makes it his PPOR for 6 months, then decides to rent it out and move back in with Homer and Marge as he misses them too much.

    If Bart were to rent it out for just under 6 years, while moving back in with Homer & Marge, would this still be classified a PPOR? Will it affect his land tax threshold in NSW or will Bart still have full land tax threshold assuming he owns no other property?
     
    money, 13th Nov, 2021
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Land Tax is a state based tax, CGT (use of PPOR exemption) is a Federal tax.
     
    Scott No Mates, 13th Nov, 2021
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  3. Terry_w

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

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    If rented no 6 year rule for land tax. If not rented it could apply potentially
     
    Terry_w, 13th Nov, 2021
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  4. Travelbug

    Travelbug Well-Known Member

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    You only get the land tax exemption on your PPOR if you are living there. But if you own no other property it shouldn't matter (unless it's valued over the threshold).
    You're not confusing the 6yr rule on CGT?
     
    Travelbug, 14th Nov, 2021
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  5. Terry_w

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

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    Not in NSW. There are a few exemptions when not living there.
     
    Terry_w, 14th Nov, 2021
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    PPOR - State land tax laws
    Main Residence exemption - CGT
    They are different rules in many ways

    The 6 year absence rule is a CGT rule. Ordinarily NSW land tax laws wont exempt a former PPOR property for absence if its rented as the exemption ceases. HOWEVER there are ways to retain it. eg Bart stays in his new home and rents 50% that is shares with his friend Millhouse. The CGT exemption doesnt allow ""absence" from that portion however. And if Bart was to move out he cant access a 100% absence exemption. But if he moves to Homer and Marges and rents 100% to Millhouse it is 100% subject to the CGT absence rule. NSW Law does contain a "6 year rule"of its own in Clause 8 of Schedule 1A but is NOTHING like the main residence exemption. Clauses 8(6)to 8(8) are an important element.

    Schedule 1A of NSW Land tax Act contains a range of exemptions but clarrification would be wise.
    LAND TAX MANAGEMENT ACT 1956 - SCHEDULE 1A
     
    Paul@PAS, 15th Nov, 2021
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