By Julian & Renee (Australia) – with writing support from Alberto Aldana (Colombia)
Surcharge land tax is an additional tax that applies to residential land owned by foreign persons in New South Wales. Australian citizens and people who are “ordinarily resident” in Australia are exempt from the surcharge, while permanent residents may face additional requirements. If you are a permanent resident planning to acquire property in Australia, it is important to understand the rules for land tax and how the 200-day residency requirement applies if you want to be exempt from this surcharge.
A permanent resident may still be treated as a foreign person for land tax purposes if they fail the “ordinarily resident” test. To be considered ordinarily resident, a person must have been physically present in Australia for 200 days or more during the 12 months immediately preceding the taxing date (31 December).
If this condition is not satisfied, the surcharge land tax may apply, even if the property is the person’s principal place of residence (PPR). A person may qualify for an exemption under section 5B of the Land Tax Act 1956 if they:
- Plan to use the land as their principal place of residence for a continuous period of 200 days during the relevant tax year; and
- Are physically present in Australia for a continuous period of 200 days during that same year of income.
If the residency requirement is not met, the consequences can be significant. If a person fails to meet the ongoing requirement of being physically present in Australia for 200 days, surcharge land tax may apply to the property, even when it is used as their main residence. This can add substantially to property ownership costs. While the law may allow certain exceptions, they are not guaranteed and depend on specific circumstances.
Before purchasing property, permanent residents should carefully consider whether they can satisfy the residency requirements in order to avoid unexpected tax liabilities.
Julian and Renee assist clients in determining the most appropriate conveyancing service for their property transaction. With extensive experience working with local councils including Blacktown, Hawkesbury, Blue Mountains, and Parramatta, they provide guidance on matters such as land tax exemptions. Their focus is on helping ensure property settlements proceed as smoothly as possible for permanent residents and foreign investors.
Our team has a proven track record of working seamlessly with the Blacktown, Hawkesbury, Blue Mountains, The Hills Shire, Hornsby, and Parramatta councils.
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