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  • Writer's picturePeter Esho

NSW land tax stealth increase under 2024-25 budget

The NSW 2024-25 Budget is set to be handed down this week and one of the key policy areas to watch will be housing. According to NSW Premier Daniel Mookhey, speaking ahead of the release, land tax will increase through a stealth measure that will see investors paying higher amounts.

We call it a "stealth" measure because while the actual tax rate doesn't look to be changing, the actual methodology is, and therefore it is a hidden tax increase.

At the moment, in NSW, land tax is payable over an amount known as the tax-free threshold. This basically means if you own land up to a certain amount, you won't be taxed until it exceeds the threshold. People's homes (primary residences) are not subject to land tax. So this relevant to residential investment properties and commercial properties only.

The threshold increases each year with inflation, also known as indexation. This year the tax-free threshold for the unimproved land value liable for the annual NSW tax increased by $106,000, from $969,000 in 2023 to $1.075 million.

  • But according to reports, the indexation will be frozen.

  • That means land tax above the threshold will not take into effect rising property prices each year.

  • Hence, higher tax, bringing in an extra $1.5bn or thereabouts each year.

This comes at an interesting time also, as NSW is about to rezone many precincts as part of its planning overhaul. This will see land prices rise in many areas that are transformed from normal residential zones to potential development zones.

Bottom line: The land tax changes likely to be announced under the 2024-25 budget will impact investors with multiple properties, commercial landlords and those who have holiday homes or secondary properties. It won't impact most households who have a single property in which they live in.

It's also unlikely to impact those who own apartments, as apartments have relatively smaller land values and would likely to fall within the threshold unless they are in premium areas.

If you would like to know more about the policy, your eligibility, pricing, terms and conditions, feel free to reach out to the Esho Capital team using the link below. Or if you prefer, you can send us a message on WhatsApp instantly and start a conversation.



Peter Esho is an economist and Founder of Esho Capital. He has 20 years of experience in investments.


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