Changes to Eligibility for Land Tax Exemption for Principal Place of Residence

On 19 September 2023, and as a result of the NSW Government’s 23/24 Budget, the Treasury and Revenue Legislation Amendment Bill 2023 (NSW) was introduced into Parliament which introduced changes to the Land Tax Management Act 1956 (NSW) which changes the eligibility for the land tax exemption relating to a person’s principal place of residence, where only one of the co-owners occupies the property.

The change imposes a minimum ownership requirement in order to access the principal place of residence land tax exemption.

Currently, there is no restriction on the percentage of ownership required by a landowner to claim the principal place of residence.  At present, where there are multiple landowners and only one of the owners occupies the property as their principal place of residence, the land tax exemption applies even if the occupier only holds a 1% interest in the land.

From 1 February 2024, a person is not entitled to a principal place of residence exemption in relation to a property unless all the persons who use and occupy the property as their principal place of residence together own at least a 25% interest in the property. 

Those who already claim the principal place of residence exemption from land tax, but own less than a 25% interest in the land, may continue to claim the exemption for the 2024 and 2025 land tax years.  The minimum 25% ownership requirement will then apply to those owners from the 2026 land tax year.

The changes do not apply to home buyers who are participants in a shared equity scheme that is approved by the Chief Commissioner under section 281 of the Duties Act.

If you believe you may be affected by this change, or wish to make an appointment, please contact the property team at Solari & Stock on 8525 2700, who can provide advice as to your position and your options if you are affected, or click here to request an appointment with our Team.

For more information on the changes please refer the Revenue NSW website.

Article written by Valentina Abouzeid.
Photo by Bailey Anselme on Unsplash

Please note the information in the article is correct at the time of writing.