In the 2023-2024 State Budget, the New South Wales (NSW) Government announced major changes to the Land Tax Management Act 1956, in particular the Principal Place of Residence (PPR) land tax exemption which commenced on 1 February 2024. The significant changes now require individuals, who use and occupy land as their PPR, to own a minimum 25% of the property either individually or jointly to claim the PPR exemption. This shows a difference from the previous requirements, where there was no specified minimum ownership threshold.
Existing landowners who qualify to claim the PPR exemption prior to 1 February 2024 and own less than 25% in a property, may continue to claim the exemption for the 2024 and 2025 tax years. However, these landowners will start being levied with land tax from the 2026 land tax year onwards if the minimum 25% ownership threshold is not met at the appropriate taxing date.
Landowners who purchase or acquire property on or after 1 February 2024 and do not meet the minimum ownership requirement will become liable for land tax from the 2025 land tax year.
The above changes will have an impact on property owners and potential purchasers in NSW. It is recommended that individuals take the time to reassess their property structures and consider adjusting their share in their property to ensure they are not subjected to paying unnecessary tax.
If any husband/wife/domestic partner landowners who intend to transfer ownership interests in your PPR, you should consider whether you are eligible to land transfer duty (previously known as stamp duty) exemptions.
For additional information on the Principal Place of Residence Exemption and to ensure you are compliant with the new rules, please refer to Revenue NSW website:
