From 1 February there are changes to land tax exemptions in New South Wales. A new minimum ownership requirement applies to applicants seeking the principal place of residence land tax exemption.
A principal place of residence is generally exempt from land tax. Only one property can be claimed as a principal place of residence, for either an individual or a family. If a principal place of residence is used for non-residential purposes, then there will be a reduction of land tax for the proportion used as a residence.
A principal place of residence exemption can only be claimed by natural persons, not corporations or trusts except for a concessional trust: s 3B of the Land Tax Management Act 1956.
Following the amendments, s 15 of Schedule 1A of the Act now imposes a minimum ownership requirement in order for a property owner, or owners, to access the principal place of residence exemption. There is now no entitlement to the exemption unless all of the people who use and occupy the land as a principal place of residence together hold at least a 25% interest in the land.
Those who currently claim the principal place of residence exemption, but collectively have an interest in the land of less than 25%, can continue to claim the exemption as a transitional measure up to 31 December 2025.
The requirement does not apply to participants in an approved shared equity scheme under s 281 of the Duties Act 1997.
The By Lawyers Conveyancing (NSW) publication has been updated accordingly.