Tax Tip 167: Land Tax and Vacant Land NSW

Discussion in 'Accounting & Tax' started by Terry_w, 23rd Oct, 2017.

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  1. Terry_w

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

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    Tax Tip: Land Tax and Vacant Land NSW

    The land tax laws for vacant land and the PPOR exemption for land tax are complex and confusing. They can be found in clause 6 of Schedule 1A of the LTMA

    LAND TAX MANAGEMENT ACT 1956 - SCHEDULE 1A


    Brief Summary

    Where an owner intends to build a principal place of residence on vacant residential land located in NSW the principal place of residence (PPOR) exemption may apply in the following circumstances.

    - Intention to use or occupy the land as the sole PPOR.

    - Land is unoccupied because owner intends to carry out, or is carrying out building works.

    - Building works has commenced, and

    - No income has been derived from the land since the building works has commenced.


    Time limits apply:

    - 4 years following the year in which the owner became the owner, or

    - 4 years since the property was occupied by another person.


    Restrictions apply:

    - Must live in the property build for at least 6 months (subclause 5)


    Example 1
    Bart has bought some land in NSW. Bart currently is living with his parents and he has one property in NSW which is valued at over the land tax threshold. Bart will have to pay land tax on this new land. However if Bart intends to build on the land he may be able to use the PPOR exemption to claim this land as his main residence as long as he starts building within 4 years of becoming the owner.



    Example 2
    Lisa lives in QLD with her husband Millhouse and they have a main residence up there. Lisa buys some land next to Bart’s land in NSW. She also has one other property so she will have to pay land tax. Bart tells her to claim the she intends to live in the property yet to be built on this land.


    Lisa does some reading and she finds this is not possible because she is counting the QLD property as her main residence at the moment.
     

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