Land Tax Exemption - Principal Place of Residence

Land tax liabilities that arise may be costly and burdensome on property owners. Therefore, all property owners must determine whether they are eligible for any land tax exemption to avoid a significant land tax liability.

Criteria

To be eligible for the PPR exemption for land tax, an owner will need to address the following criteria:

• only claim one exemption per family;
• have continuously used and occupied the property in the taxing year solely for residential purposes before the taxing date (31^st December in each year);
• have used the land for residential purposes; and
• be a natural person.

Pursuant to s 8 of Schedule 1A of the Land Tax Management Act, an owner who is absent from their principal place of residence will be taken to have continued to use and occupy that residence if:

• prior to the absence, the owner continuously used and occupied the residence for at least six months; and
• during the absence, the owner did not own, use or occupy another residence.

The maximum period for which an owner may continue to use and occupy a former residence as a principal place of residence is six years, starting at the end of the last period (of at least six months) during which the former residence was used and occupied by the owner as a principal place of residence.

What if I Rent My Property?

An owner may choose to derive income from the property by renting out the former residence under a lease or licence. Provided that the period that the owner rents out the former residence does not exceed a continuous six-month period or for periods not exceeding a total of 182 days in the calendar year preceding each taxing date to be eligible for a land tax exemption.

Should the owner rent out the former residence for periods longer than a continuous six-month period or periods exceeding a total of 182 days in a calendar year preceding each taxing date, the owner will not be eligible for a land tax exemption and therefore will incur a land tax liability in the following tax year unless the rental income derived by the owner is no more than an amount reasonably required to pay the cost of regular outgoings, such as council, water energy rates, and maintenance costs of the owner in respect of the former residence (excluding the cost of mortgage repayments).