Land Tax changes to principal place of residence exemption

Posted on 24 January 2024 | by Allan Hall

Land tax principal place of residence exemption changes

From 1 February 2024, persons 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, 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.

Principal place of residence

You can claim an exemption for land that you use and occupy as your principal place of residence (your home).

The general requirements of this exemption are that you must:

only claim one exemption per family
only claim one principal place of residence worldwide
have continuously used and occupied the property solely for residential purposes before the taxing date
have used the land for residential purposes
be a natural person — the exemption does not apply to land owned partly or wholly by a company or held in a Special Trust.

The 2023-24 NSW State Budget announcement introduced an amendment to Schedule 1A of the Land Tax Management Act 1956. Following the amendments, a principal place of residence exemption will only be available to a person/s occupying the property as their principal place of residence who owns an interest of at least 25% in the property, either solely or combined.

The transitional provision provides that, those who claim the principal place of residence exemption from land tax but own less than a 25% interest in the land may continue to claim the exemption for the 2024 and 2025 land tax years. The minimum 25% ownership requirement will then apply to these owners from the 2026 land tax year onwards. The principal place of residence exemption must be claimed by 31 January 2024 for the transitional provisions to apply.

For persons who purchase a property on or after 1 February 2024 and own less than a 25% interest in the land will not be entitled to the principal place of residence transitional provisions, making them liable from the 2025 land tax year.

When applying for the exemption you may need to provide supporting documents such as but not limited to:

electricity bill showing usage
gas bill showing usage
home and contents insurance policy

Council land rates and water rates are not acceptable documents as these do not demonstrate you reside in the property.

CONTACT ALLAN HALL BUSINESS ADVISORS

NSW Commercial Landlord Hardship Fund

Posted on 1 September 2021 | by Allan Hall

Commercial Landlord Hardship Fund summary and guidelines

The Commercial Landlord Hardship Fund provides grants of up to $3,000 per month per retail or commercial lease to eligible small landlords who may experience hardship as a result of reducing rent for their tenant(s) under the Retail and Other Commercial Leases (COVID-19) Regulation 2021 (the Regulation).

The Commercial Landlord Hardship Fund will open for applications in October 2021 and will conclude when determined and notified by the State Government.

The NSW Government introduced the Hardship Fund to provide support to smaller landlords whose main source of income is impacted by providing rent relief to retail or commercial tenants and those tenants financially impacted by the 2021 COVID-19 lockdown.

The Fund will provide grants of up to $3,000 per month per tenancy to small commercial or retail landowners, who will suffer hardship if they waive some or all of the rent of a tenant who is financially impacted by COVID-19 in 2021 and have not claimed any land tax relief for rent reductions provided between 1 July 2021 and 31 December 2021.

The Regulation provides:

a moratorium on lockouts and other prescribed actions for the non-payment of rent, outgoings or the non-compliance of business operating hours specified in the lease for businesses that have experienced a reduction in turnover due to COVID-19, and a freeze on rent increases during the moratorium (commencing 13 July 2021)
government supported mediation to help tenants and landlords renegotiate lease agreements (including rent relief) through waivers and deferrals.

Landlords of impacted tenants must renegotiate rent with eligible tenants in good faith having regard to the leasing principles in the Code of Conduct.

Under the leasing principles, landlords must reduce rent in proportion to the tenant’s decline in turnover. This means if a tenant has experienced a 40% decline in turnover due to COVID-19, then the landlord must provide a 40% reduction in rent.

As a default position, at least 50% of any rent reduction must be in the form of a rent waiver with the remainder a rent deferral. Any deferred rent must be paid back over the balance of the lease term or for a period of no less than 24 months, whichever is greater.

A deferral or delayed rent payment is not rent relief for the purposes of this grant. A rent waiver or non-payment of rent from 13 July 2021 must be agreed.

Total taxable landholdings used to assess eligibility for this grant will be those of the landlord or the trust in which a property is held. It will also include property held in Self-Managed Superannuation Funds.

How the program works

Before applying to the Commercial Landlord Hardship Fund, landlords must complete the following process under the Commercial Tenancy Relief Scheme:

Reach an agreement through either mediation or private negotiation with impacted tenants, that complies with the Retail and Other Commercial Leases (COVID-19) Regulation 2021
Obtain tenant’s approval to disclose terms of agreement for the purpose of applying for the Commercial Landlord Hardship Fund grant
Show evidence that the agreed amount has been applied to the month for which the grant is being claimed.

Landlords may then apply for a grant of up to $3,000 per month per eligible property in proportion to their ownership share subject to:

cessation of the Scheme as publicly announced; or
until all funds from the hardship fund have been exhausted, whichever is sooner, and
monthly attestation (for the term of the rental abatement agreement) from the applicant that
- The rental abatement agreement remains in force; and
- All other scheme requirements continue to be met, in particular ongoing financial hardship of both the tenant and landowner.

Applicants must apply online via the Service NSW website from October 2021. All questions in the application must be answered to enable assessment and grant payment.

For eligibility criteria, application evidence, terms and use of funds, please consult the Service NSW website.

Allan Hall can provide assistance to our clients as we have done with previous NSW grant programs. Call our team in Brookvale on 02 9981 2300.

NSW COVID-19 land tax relief

Posted on 2 August 2021 | by Allan Hall

Apply for COVID-19 land tax relief

If you’re a  commercial or residential  landowner who has reduced  your tenants’ rent due to COVID-19, between 1 July 2021 and 31 December 2021, you may be eligible for the NSW Government’s land tax relief. 

The relief will be a reduction in the 2021 tax payable on the parcel of land where rent relief has been given to the tenant who occupies that land.

» You can apply online at https://mybusiness.service.nsw.gov.au/transactions/land-tax-relief/ready-to-start

(See the recommended 14-step process for How to Apply on the Service NSW website.)

The land tax reduction will be the lesser of:

the amount of rent reduction you provided to an eligible tenant for any period between 1 July 2021 and 31 December 2021, or
100 per cent of the land tax attributable to the parcel of land leased to that tenant.

Land tax relief will:

be paid to you as a refund if you’ve already paid your land tax
be used to offset the balance of the amount of land tax payable if you have not yet completed payment.

Note: A residential tenancy support payment for properties tenanted in NSW is also available. If you’re a residential landlord, you can apply for either the land tax relief or the residential tenancy support payment. You cannot apply for both, so you’ll need to decide which is more appropriate for you, before applying.

Eligibility

To be eligible for relief on your 2021 land tax,  you’ll need to:

be leasing property on your parcel of land to:
- a commercial tenant who has:
  - an annual turnover of up to $50 million, and is eligible for the:
    - Micro-business COVID-19 Support Grant
    - 2021 COVID-19 NSW Business Grant and/or
    - JobSaver scheme, or
- a residential tenant who has lost 25% or more of household income due to COVID-19.
have reduced the rent of the affected tenant for any period between 1 July 2021 and 31 December 2021
have provided the rent reduction without any requirement for it to be paid back at a later date
have a 2021 land tax liability attributable to the parcel of land where the rent reduction has been given.

If you’re not eligible for land tax relief you can request an extended payment arrangement for your land tax if necessary.

Note: You can still apply for this period of land tax relief, even if you applied for any of the previous relief periods, provided you meet all the eligibility requirements.

For an itemised list of information and proof of identity documents to make an application, please visit the Service NSW website. If you’re eligible, this relief can reduce your land tax liability for 2021 by up to 100%. You can apply for multiple properties in a single application. However, you can only select one bank account per person.

Once you’ve submitted your application you’ll receive a confirmation email. Revenue NSW will review your application and advise you of the outcome. If further information is required they will contact you.

More information

You’re able to apply for multiple properties at the same time.
Only select one bank account per person.
If there’s been a change of circumstances or eligibility since your initial application, you can resubmit your application.
If you’re submitting this application on behalf of a landlord, you’ll need to have the authority to do so.
There is no requirement for rent reduction negotiations to have been concluded when you apply for land tax relief.
Providing false or misleading information will incur penalties.