A Guide To Land tax in 2024

Managing land tax is an integral part of Property investment in Australia, especially with the current rise in property values. we aim to provide clear and actionable insights to help you in this complex area.

What Is Land Tax?

Land tax is a recurrent expense levied on the total value of all your non-primary residence properties. It’s calculated annually, except in the Australian Capital Territory where it’s assessed weekly. Wise investors often choose properties with lower land values to minimize their tax burden.

Who Needs to Pay Land Tax?
Land tax obligations apply if you own:

Rural or undeveloped land
Residential properties, such as houses or apartments
Holiday homes or investment properties
Properties held under a company title
Commercial or mixed-use buildings, including parking facilities
Land leased from any government entity
This tax is also applicable to foreign owners and for properties that exceed certain value thresholds, irrespective of the property’s income generation.

Exemptions from Land Tax
Land tax is not applicable on:

Your principal place of residence
Any land that falls below the set tax threshold
Calculating Land Tax The tax is based on the ‘unimproved value’ of the land and is calculated using a progressive scale. If your land’s value goes beyond the exemption limit, you’ll face a base rate plus an incremental charge for each dollar above the threshold.

How to Get an Exemption from Land Tax, You might be eligible for an exemption if you:

Are residing in your primary residence as of June 30th
Are transitioning between homes
Are in the process of building or moving into a new home
Are handling a deceased estate
Have moved into a full-time care facility
Properties used for both exempt and non-exempt purposes, such as residential and business, may be eligible for partial exemptions.

Impact of Ownership on Land – Tax The tax implications can vary depending on how the land is owned:

Individual or Joint Ownership: Your tax is proportional to your ownership share.
Companies: Assessed in a manner akin to individual ownership.
Trusts: Assessed differently, and eligibility for thresholds can vary based on the type of trust.
Thresholds for Land Tax You will be liable for land tax if the taxable value of your land is $600,000 or more as of June 30th. Valuations are performed annually, taking into account the average values over the previous three years.

Distinguishing Land Tax from Property Tax It’s important to differentiate between land tax and property tax. Land tax is imposed on the unimproved value of land to encourage optimal use and prevent hoarding, while property tax is based on the overall value of the property, funding local infrastructure and services.

FAQs

Joint Ownership: Tax responsibility is based on each owner’s share.
Trust Ownership: Trusts are taxed under different rules, and some types qualify for thresholds.
Building on Land: Generally taxable unless you qualify for specific exemptions.
Exemption Eligibility: Exemptions can be claimed under various scenarios, including use as a primary residence or for charitable purposes.

Thank you for Reading.