Tax Tip 363: Land Tax When the Owner is in Hospital or Aged Care (NSW)

There are some land tax concessions in NSW where an owner is absent from their principal place of residence because they are in an aged care facility of hospital. They can taken as still occupying the PPOR even if they are absent for beyond 6 years.

Note that this is not the case with CGT.

This concession even extends to the situation where they are living with another person who is their carer.



Example

Krusty the Clown has several properties in NSW and lives in the most expensive one. Krusty’s adult son doesn’t own any property when Krusty is declared insane and locked up in a mental hospital.

Krusty had made his son is enduring attorney and guardian well before this and the appointment document gave the son full powers to use assets and make gifts to himself.


The son moved into Krusty’s PPOR in order to save rent and to also help maintain the property.

The son was aware of the limited 6 year rule for land tax but was getting worried as the 6 years was up soon and Krusty was still as crazy as ever. The land being worth $1 million would mean some serious land tax would result.

But the clown was saved by subclause 8(4) of Schedule 1A of the Land Tax Management Act NSW which states that the property can continue to be considered occupied by Krusty while he is in full time care – which is defined to include that of a mental hospital.



See LAND TAX MANAGEMENT ACT 1956 - SCHEDULE 1A

 

The key issues will revolve around what occurs with the property while in care. If rented on market terms it is generally subject to land tax in NSW. If occupied for token rent that covers ownership costs ...usually by family, it may access the VERY DIFFERENT land tax 6 year absence rule in Clause 8 of Sch 1A. The CGT exemption may also apply (seek advice as a license to occupy could also be a main residence interest and you cant have two exemptions) and consideration given to whether 6 years applies or if no rent is charged and the time period is unlimited with the occupant merely paying outgoings on behalf of the owner. The land tax exemption must be applied for.