We own own 2 properties in NSW both in joint 50/50 ownership. P1. PPOR for 17 years. 2021 valuer general is 330k (13acres) approx gain 500k P2. IP for 14 years. 2021 valuer general is 1130k with estimated CGT of 1.2m. It is estimated that this value will jump again next year by about 200k. Current lease finishes on Feb 10. We are planning to move into Property 2 the original IP and claim this as PPOR. The original PPOR (P1) will not be sold but will be rented. Question regards this scenario: we move in to IP and claim as PPOR (informing NSW OSR) and then live there fulltime for 6 months. We plan to go travelling for 6 months while leasing the property for 6 mths only After this move back in. Thus hoping to avoid triggering land tax on property because the lease is not longer then 6 mths in a calendar year. However the lease period would take it through the dec 31 date. Would we be liable for land tax in this case?
Yes. Land tax considers the property AT 31 December as its primary test. If its leased on that date the 6month rule isnt considered. Its taxable. Even for one night !! A principal place of residency is not maintained. However there may be exemption if a former home is maintained as vacant and is not rented out. The 6month rule is only a consideration to claim a exemption, not for taxable property. A common mistake is moving the tenant out on 30 December and thinking its then exempt. It is except the 6month rule kicks in to deny the exemption.
Thanks for the help. I have read the info on the OSR website and watched their video's many times. Is reading the actual ACT also recommended?
The NSW Land Tax Act is well written for a lay person to understand. Provided you read the specific sections AND Schedule 1A. In addition, the Commissioner has some rulings that explain the OSR views on how some elements of the law are interpreted and applied. Eg some exemptions must be applied for using a form or process. The law appears to indicate the exemption is available but the OSR view is on application and approval. eg You may need to submit some evidence. Websites are a poor substitute as they are general in nature and cant replicate the law well. And if any inconsistency in grammar causes confusion or error there is no protection and the law prevails. Its like the ATO. They have a massive website but little of it explains all the circumstance, facts and case laws. Application of tax law is as important as general knowledge. This is why solicitors are needed to advise on laws.
Here it is LAND TAX MANAGEMENT ACT 1956 - SCHEDULE 1A I read this weekly, over and over again checking it each time I advise as sometimes you might need to confirm your memory
