NSW land tax threshold increases 0.2% after a 1.77% across-the-board gain
The NSW Valuer-General has determined that the land tax threshold for the 2012 land tax year is $396,000. Every investment property above that level will be billed land tax. It follows a 1.766% increase in values, which given three-year rolling averaging will result in a 0.2% increase in the land tax threshold for the 2011 land tax year of $387,000.
During the 2011 land tax year there had been a 2.9% rise in the 2011 threshold for property taxes from $376,000, when overall land values in NSW, including industrial and commercial as well as residential, rose an average of 5.42%.
The low 0.2% increase in the threshold might cause some NSW investors to creep into the tax-paying category if they were sitting just below the current threshold and have shown some value appreciation resilience in the yet-to-be released individual valuations.
NSW Valuer-General Philip Western will issue individual new valuations later this year that will form the basis of tax assessments sent out by the NSW Office of State Revenue early next year. The State Government bases individual assessments on rolling three-year averaging of land valuations to take account of changing property values.
The state government collects about $2 billion in land tax a year. Non-residential properties account for about 60% of land tax revenue.
In the current year an investor owning a property with a land value of $470,000 (with the 2011 threshold of $387,000) property tax is levied on the difference of $83,000 at 1.6¢ on the dollar, plus $100, so the tax payable is $1,428.
The principal place of residence is exempt from land tax. Land tax is a tax levied on the owners of land in NSW as at midnight on December 31 of each year. Land tax applies to land regardless of whether or not income is earned from the land. The land tax assessment is calculated on the combined value of all the taxable land you own above the threshold.
The value of taxable land does not include any structures or improvements on the land such as a house.
There has been a threshold since 2005. From the 2007 tax year onwards the threshold is the average of three years - the current year and two prior years.
Year | Indexed amount |
For the 2010 land tax year | $380,000 |
For the 2011 land tax year | $401,000 |
For the 2012 land tax year | $408,000 |
Average | $396,000 |
The Valuer General says the $408,000 figure was arrived at through a specific formula as required under the Land Tax Management Act.
“Put simply it is the 2011 land tax year indexed amount ($401,000) times the average change in land values from 1 July 2010 to 1 July 2011 – in this case 1.766%,” he notes.
For advice on buying your first investment property, download our free e-book.
