Significant Changes to NSW Land Tax & Landholder Duty Thresholds

Significant Changes to NSW Land Tax & Landholder Duty Thresholds

Effective 1 Feb 2024, the following changes to NSW land tax and landholder duty thresholds now apply:

  1. Land Tax– The threshold for principal place of residence exemption increases from 1% to 25%, with a transition period ending 31 December 2025.
  2. Corporate reconstruction and consolidations– a 10% duty on “corporate reconstruction” and “corporate consolidation” transactions.
  3. Landholder duty

a) the landholder duty ‘trigger’ threshold for private unit trust schemes is reduced from 50% to 20%;

b) that threshold can be increased from 20% to 50% but only for “wholesale unit trusts” that are registered.

A summary of these changes are explained below.

Land tax principal place of residence exemption

Those who purchase and occupy a property but own less than 25% interest (either solely or combined) will not be entitled to the principal place of residence exemption from the 2025 land tax year onwards.

A principal place of residence is generally exempt from land tax. Only one property can be claimed as a principal place of residence. If a principal place of residence is used for non-residential purposes, then there will be a reduction of land tax for the proportion that is used as a residence.

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 up to 31 December 2025.

Transitional provisions may apply until the 2026 land tax year for existing homeowners, and those who purchase a property and claim the exemption by 31 January 2024.

Corporate reconstruction duty and consolidation relief

  • Corporate reconstructions will no longer be able to get a 100% stamp duty concession. This concession will be reduced to 90% in duty otherwise chargeable will be given to successful applications, resulting in 10% of the dutiable value.
  • Transitional provisions will assist in relation to ensuring that transactions that occur after the changes come into force on 1 February 2024 but which came about because of an arrangement entered into before 19 September 2023 will get the full exemption provided that the application for the exemption is made on or before 1 April 2024.
  • Any transactions that occur before 1 February 2024 will continue to get the full exemption.

Landholder duty for private unit trust schemes

  • Landholder duty is applied when an acquisition of ‘significant interest’ in a company or unit trust that owns $2 million or more worth of unencumbered land in NSW.
  • A reduction of the threshold for the acquisition of a ‘significant interest’ in a private unit trust from 50% to 20%.
  • The threshold for tracing property interests through linked entities will also be reduced from 50% to 20%. The threshold for acquisition of a “significant interest” in a wholesale unit trust or imminent wholesale unit trust will remain at 50%.

If you have any concerns or questions in relation to these changes, please contact our office.